On July 1, 2020, we roll forward and roll down 1 covered call on BAC stock - a position originally established at the start of June with the strike price of $29.00, see: Covered Call on BAC - Potential income return 3.52% in 5 days. For this roll forward covered call we got an additional $19 (before commissions).
BAC is our "worst" investment as of now, we bought 100 shares at $28.67, and shortly after our buy BAC dipped to $23-$24 range, making it harder for us to get a decent options income, without sacrificing our strike prices.
Today it was decided to lower our strike price from $29 to $28 (as our break-even price was $27.94). In case our shares will get called away at $28, we still will make a little profit. Another option we could do - wait for the stock price possibly to recover, but we think while waiting it is better to take some small income. In case there is a price rally, we might roll up our strike price.
This trade comes as the first (#1) in the month of July, and if we stick with our trading plan for this month, the premium generated from this trade makes us about 2.37% from our $700 monthly goal.
here is our trade setup:
- SLD 1 BAC JUL 31 '20 28 Call Option 0.19 USD
what can happen next:
BAC is trading below our strike price of $28 at the expiry date (July 31, 2020), in such a case, we keep the premium and sell more covered calls to lower our cost basis.
In case BAC is trading above our strike price of $28, our 100 shares get called away at the strike price of $28 and we realize our max gain $22 or 0.76% potential income in 52 days
- Running Total 6 Trades since June 8, 2020
- Trade P/L $89