In-the-Money Call With HUYA

Huya (HUYA) has been seeing a lot of option action. I’m a little worried about the market moving so high so I decided to sell an In-the-Money Covered Call. I bought 1000 shares of the stock at $25.17 and sold the $25 Call. I sold 10 HUYA 7/24/20 $25 Calls for a premium of 1.07.

Buy 1000 Shares of HUYA @ $25.17

Sell to Open 10 HUYA 7/24/20 $25.00 C @ $1.07 (+$1070)

This is a very high premium but if I get assigned at $25 I’ll lose 17¢ on the stock. If I get assigned I’ll make the $1.07 on the premium minus the 17¢ loss on the stock for a total gain of 90¢ for $900. This is what I would like to see happen. If I don’t get assigned I keep the stock and have the benefit of a large premium from selling the In-the-Money Call. If I get assigned the ROI will be 3.5%.

This trade gets a Risk Factor 1.

Successful trading,

Steve

The Options Coach