Roll Forward and Roll Down BAC JUL 31 '20 28 Covered Call Option 0.19 USD (0.76% potential income in 52 days)

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. 

BAC stock price as of July 1, 2020
BAC stock price as of July 1, 2020

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

Break-even: $27.78

Selling covered calls with BAC stock
Selling covered calls with BAC stock
  • Running Total  6 Trades since June 8, 2020
  • Trade P/L $89