A Covered Call with Trump Media & Technology Group (DJT)

This trade I look at as a bit of a gamble. I know nothing about Trump Media & Technology Group (DJT) or Truth Social. So let me tell you why I made this trade.

I looked at the charts and nothing made me too nervous. The stock spiked at its inception in Oct , 2021 and went up to $175. After the hype the stock came down and was trading as low as $13 in 2023. The stock spiked again in Jan, 2024 and went up to the $80 area. Today I bought 200 shares at $33.20. As you can see the stock was all over the charts. I decided to take a shot with a great premium with an In-the-Money Covered Call. I bought the stock at $33.20 and sold two DJT 11/15/24 $30 Calls for a premium of $2.75.

Buy 200 Shares DJT @ $33.20

Sell to Open 2 11/15/24 $33.00 C @ $2.75 (+$550)

This premium is 8.2% at the buy-in price of $33.20. Let’s see what can happen with this Risk Factor 3 position.

Stock closes above $33 – I would get assigned. I’ll keep the $550 premium and I would lose 20¢ on the stock sale. My profit would be $510. My Return on Investment (ROI) would be 7.6% for the 5 day trade.

Stock closes below $33 – I would keep the stock and keep the $550 premium. My ROI would be 8.2% for the 5 day trade. Then I will sell another 2 contract Call option on my shares.

Out of these two possible outcomes I really don’t care which one happens. I just don’t want the stock to take a big dip. With the market still running as a result of the election I don’t think this will happen…..But you never know!

 

Successful trading,

Steve

The Options Coach