Covered Call With Applied Materials

When I write about having money on the sidelines it’s so I don’t run into problems with my margin account during a sell-off. Also, when there is a sell-off to have funds available for good buys. Well, we are in a sell-off so I went shopping.

Applied Materials (AMAT) is a great company. AMAT stock is up 36% year-to-date. And it’s easy to see why. The company recently reported $5.16 billion in revenue which was a year-over-year increase of 24%. And Applied Materials also posted a 27% increase in Earnings Per Share (EPS) for the same quarter.

I can do a full report on this company, and on their position in the need for semiconductors, but I want to get this trade out. This is the type of stock that can end up in my Wealth Builder. For now I decided to just do a Covered Call and bring in some money in this bad week. I bought 1000 shares at $115.85 and sold 10 contracts of the 3/5/21 $116 Calls for a premium of $1.75 (+$1750). This is great for an option expiring this Friday. The premium is a 1.5% return and if I get assigned I’ll make another $150 on the stock sale.

Buy 1000 Shares AMAT @ $115.85

Sell to Open 10 AMAT 3/5/321 $116.00 C @ $1.75 (+$1750) 

I picked a Strike Price to get assigned and take in a nice premium. I think I’ll get assigned and out of this position. This trade gets a Risk Factor 1. Do some homework on this stock. You will like what you read.

 

Successful trading,

Steve

The Options Coach