Sold 1 Covered Call on KO - Potential income return 5.64% in 11 days

On March 1, 2021, we sold 1 almost covered call on KO stock expiring on March 12, 2021. For this trade, we got a $8 premium (before commissions).

This trade comes as #1 in the month of March, according to our trading plan for this month, the premium generated from this trade makes us about 0.28% from our $2,000 monthly goal. While in total we have reached already 0.28% so far. Awesome.

We sold a covered call, despite we are holding just 40 shares with this stock. In case our strike price will get touched, we will have to buy the missing 50 stocks in the open market (~ $3,000). There are two reasons why we sold a covered, before reaching 100 shares:

  • it helped to increase our buying power
  • we feel confident enough to take this little risk

The Coca-Cola Company is an American multinational beverage corporation incorporated under Delaware's General Corporation Law and headquartered in Atlanta, Georgia. The Coca-Cola Company has interests in the manufacturing, retailing, and marketing of nonalcoholic beverage concentrates and syrups.

As we have been buying KO using dollar-cost averaging our average buy price is: $49.75

here is our trade setup:

  • SLD 1 KO MAR 12 '21 52.5 Call Option 0.08 USD

what can happen next:

KO is trading below our strike price of $52.5 at the expiry date (March 12, 2021), in such case, we keep the premium and sell more covered calls to lower our cost basis. 

In case KO is trading above our strike price of $52.5, our 100 shares get called away at the strike price of $52.5 and we realize our max gain $280.6 or 5.64% potential total income return in 11 days

Break-even: $49.7

Selling covered calls with KO stock
Selling covered calls with KO stock
  • Running Total : 1 Trade since March 1, 2021
  • Options income $6