Roll Forward and Down TWO JUL 17 '20 5 2x Covered Calls 0.15 USD (17.02% potential income in 38 days)

On June 25, 2020 we roll forwarded  and rolled down 2 covered calls on TWO stock  - a position established on June 9, 2020 with the strike prices at $7, see: Sold 2 Covered Calls on TWO stock - Potential income return 30.7% in 10 days For this roll forward we got an additional $30 (before commissions)

As TWO was trading below our strike price on the expiry date, we just roll forward and down (strike) to the next closest expiry in July. Unfortunately, or for luck,  TWO has only monthly options. This is something to remember when looking for a quick buck. 

  • SLD 2 TWO JUL 17 '20 6 Call Option 0.15 USD

We originally bought this stock at $6.38, but as we get a hefty $1.35 premium our break-even price was $5.02

what can happen next:

TWO is trading below our strike price of $6 at the expiry date (July 17, 2020), in such a case, we keep the premium and sell more covered calls to lower our cost basis. 

In case TWO is trading above our strike price of $6, our 200 shares get called away at the strike price of $6 and we realize our max gain $216.8, or 17.02% potential income in 38 days

New Break-even price: $4.91

There is one more thing to add: TWO is going ex-div on Jun 29, with a dividend of $0.14 per share paid at the end of July. If the stock price stays under our strike price of $6 we are going to collect an additional $28 (before tax) while holding TWO stock. Neat.

Selling Covered Calls with TWO stock
Selling Covered Calls with TWO stock

  • Running Total 3 Trades since June 9, 2020
  • Trade P/L $290.40

This trade comes as the #24 in the month of June, and if we stick with our trading plan for this month, premium generated from this trade makes us about 4.16% from our $600 monthly goal, while in total we have already reached 190% from our goal. Awesome