Covered Call With Paypal

At the close yesterday I made a trade with Paypal (PYPL). I bought 100 shares of the stock at $103.75 and sold a 1 contract Call. I sold 1 contract of the PYPL 4/22/22 $104 Call for a premium of $1.75 for $175.00.

 

4/19/22 – Buy 100 Shares PYPL @ $103.75

4/19/22 – Sell to Open 1 PYPL 4/22/22 $104.00 C @ $1.75 (+$175) 

 

This is basically an At-the-Money (ATM) Covered Call. ATM Calls give you the best premium while not losing money on the stock if assigned. If I’m assigned on this position I’ll make $25 on the stock sale. The premium is a return of 1.6% for the 3 day trade. I would like to get assigned and move on.

In today’s market environment I find ATM Calls very attractive. If I don’t get an assignment at least I’m taking a nice premium. I’m also looking at slightly In-the-Money Covered Calls. I’ll give a little back on assignment but I’ll have more of a chance of getting an assignment; plus In-the-Money Calls give you the best premiums. This is a strategy taking a premium with a great return while getting assigned and giving back a small amount to help guarantee assignment.

With the market going up and down with volatility I like bringing a position to an end (with a profit) more than ever.

 

Successful trading,

Steve

The Options Coach