Roll Forward and Down TWO OCT 16 '20 5 2x Covered Call Options 0.17 USD (6.57% potential income in 129 days / 18.52% annualized)

On September 23, 2020, we roll forwarded and rolled down 2 covered calls on TWO stock - a position originally established on June 9, 2020, with the strike prices at $7.

With the market tanked we were not able to get any options premium with the strike prices $7 or $6 and because we are trading on margin, it was agreed to roll down this covered call to the strike price at $5.

 

With the current share price hovering around $5 we are risking to miss a dividend (ex-date September 30), as our shares might get called away. But as we have made some nice profit already in the past, we are ready to let this share to go to minimize our margin balance.

This trade comes as the #33 in the month of September, according to our trading plan for this month, the premium generated from this trade makes us about 3.65% from our $800 monthly goal, while in total we have already reached 76.84% so far this month

here is our trade setup

  • SLD 2 TWO OCT 16 '20 5 Call Option 0.17 USD

what can happen next:

TWO is trading below our strike price of $5 at the expiry date (October 16, 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 $5, our 200 shares get called away at the strike price of $5 and we realize our max gain $83.8, or 19.9% potential income in 129 days

New Break-even price: $4.59

  • Running Total 6 Trades since June 9, 2020

  • Options income: $357