ITM Covered Call on PLTR - Potential income return 2.55% in 4 days

On January 4, 2021, we bought 100 shares of PLTR stock paying $23.46 per share, and simultaneously sold 1 in the money (ITM) covered call with a strike $23 on it, and expiry set on January 8, 2021. For this trade, we got a small $106 premium (before commissions). But as we are selling ITM options our potential max profit is $60.

PLTR is a new addition to our options toolbox, I decided to go with PLTR as I got an inheritance from my dad, which I decided to split into two parts and put on work at the stock exchange. lower income but stable and higher income but volatile. PLTR is from the volatile part.

This trade comes as the #1 in the month of January, according to our trading plan for this month, the premium generated from this trade makes us about 4.04% from our $2,500 monthly goal. 

here is our trade setup:

  • BOT 100  PLTR  Stock  23.41 USD  
  • SLD 1 PLTR JAN 08 '21 23 Call Option 1.06 USD

what can happen next:

PLRT is trading below our strike price of $23 at the expiry date (January 8, 2021), in such case, we keep the premium and sell more covered calls to lower our cost basis. 

In case PLRT is trading above our strike price of $23, our 100 shares get called away at the strike price of $23 and we realize our max gain $60 or 2.55% potential return of income in the next 4 days

Break-even: $22.4

Selling covered calls with PLTR stock
Selling covered calls with PLTR stock
  • Running Total  2 Trade since January 4, 2021
  • Options income $104