On 6/26/17 I bought 2000 shares of Advanced Micro Devices (AMD) and on 9/1/17 I sold 20 contracts of the 1/19/18 $15 Calls. This January date is the expiration date of the yearly LEAP.
On 9/20/17 I bought another 500 shares of AMD to have in the case the stock went up. With the Covered Call I just mentioned above the stock gain is limited at $15 because that’s my Strike Price. I figured if the stock goes up I would have 500 shares unattached to an option so I could enjoy gain on the stock if it went up. Well, I’ve been holding for a while and it hasn’t been moving so I decided to also sell the same January option on these shares also. I bought the 500 shares at $14.30 and I just sold 5 contracts of the 1/19/17 $15 Call and received a premium of $1.20 for $600. I’ll be holding these positions until January but I’m getting a nice Rate of Return so I’m happy. Here’s the option I just sold:
Sell to Open 5 AMD 1/19/18 $15 C @ $1.20 (+$600)
This trade gets a Risk Factor 1 because it’s a Covered Call on a very good stock. I bought the stock on 9/20/17 for $14.30 per share. Getting a $1.20 premium is a Rate of Return of 8.3% for a 100 day trade. In a bank you cannot get close to that for a 1 year CD.
Steve
The Options Coach