Covered Calls With TWTR & UAL
I own 1000 shares of Twitter (TWTR) and 2000 shares of United Airlines (UAL). My shares of TWTR I own at $28, and the UAL shares I own 1000 at $24.75 and 1000 at $28. Yesterday I got into a Covered Call with the UAL $24.75 shares.
A few minutes ago I sold Covered Calls with TWTR and my $28 shares of UAL. With TWTR I sold 10 contracts of the 5/8/20 At-the-Money $28 Calls. I received a $1 premium. If I get assigned I’ll keep the $1000 but I will not make any money on the stock. I sold the $28 Call because the premium was much higher than the $28.50 or the $29 Calls. With the market being so volatile I want the bigger premium. With the stock moving up and down with the volatile there’s a chance I won’t get assigned, so I might as well take the higher premium. This premium is a return of 3.5%. I’ll take this and run!
Sell to Open 10 TWTR 5/8/20 $28.00 C @ $1.00 (+$1000)
This is a Covered Call on a solid stock so the trade gets a Risk Factor 1.
With UAL I bought the stock at $28 on 5/1. The stock is down a couple of bucks so I couldn’t get a great premium for the $28 Call. I decided to go out another week with the Expiration Date. This Call will expire next Friday the 15th. I sold 10 contracts of the UAL 5/15/20 $28 Calls. Since I bought the stock at $28 this is an At-the-Money Call. If I sold the $28 Call for this Friday I would have received a premium of 33¢, but going out to next Friday I received a premium of $1. I have to hold an extra week but I like the $1 premium for $1000.
Sell to Open 10 UAL 5/15/20 $28.00 C @ $1.00 (+$1000)
This trade is also a Risk Factor 1.
Successful Trading,
Steve
The Options Coach