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| DISCLAIMER: This trade is based on this date. I'm not suggesting a move up or down. I'm showing my trade that I have already done. I'm not recommending this stock as a purchase. Think of it like this, I'm showing you the world thru my eyes. | ||||
| NEW TRADE ALERT |  | |||
| Wednesday, November 20, 2019 | ||||
| Covered Call Trade opened using a Standard Covered Call Strategy | ||||
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| NEW Covered Call position with NVIDIA Corporation (NVDA) this week | ||||
| Brief Description of WHY I did this trade and my expectations for it | ||||
If you remember, I purchased NVDA at ~$154 and rallied it to $190+.. sold the Jan2020 $190 for $12 ... max profit $202 ... when NVDA rallied past $202 I got a little FOMO and as it reached $214 ... and pulled back to $210 ... I'm thinking this is a time to get back in for another $100 shares ... see below how this 30 day is setup, looking for another max profit in hopes it goes above $220.
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| Trade Breakdown with the 'Krums Calc' | ||||
| COMPANY | SYMBOL | SHARES | PRICE | TOTAL COST |
| NVIDIA Corporation | NVDA | 100 | $210.95 | $21,095.00 |
| STRIKE | OPTION | OPTION GAIN | STOCK GAIN | TOTAL KRUM |
| $220.00 | $4.40 | $440.00 | $905.00 | $1,345.00 |
| DIVIDEND | CASH ON CASH KRUM % | ANNUAL GAIN | ||
| $0.00 | $0.00 | 6.38% | ||
| Yes, they offer investors a dividend but *NOT* during this trade timeframe | ||||
| Current Stock Price | Implied Volatility | Imp Vol (+) | Imp Vol (-) | DELTA |
| $210.95 | 32.81% | $245.56 | $176.34 | 0.327 |
| $245.56 | ||||
| $210.95 |  | With Implied Volatility being 0.16405% to reach $245.5563475 in this 30 day period, with this Covered CallStrike I'm hoping the stock moves just 0.121148838587343% of that 0.3281% Implied Volatility | ||
| $176.34 | ||||
| Important Trade Details | ||||
| Trade details - 1 contract(s), Strike Price $220 , Premium of $4.4, with a Dec-20th expiration date receiving a total credit of $440. per share | ||||
| I Purchased 100 shares for $210.95 on Nov-20th , $21095 , total investment. | ||||
| The will be a 30 day trade | ||||
| This Out the Money (OTM) Covered Call trade has a potential Cash On Cash Return of : | ||||
| CC - If shares are taken away $13.45 per share, or 6.38 %- Annualized 77.57% | ||||
| CC - If my shares are not taken away $4.4 per share, or 2.09 %- Annualized 25.38% | ||||
| Dividend during this 30 day period? No EX-Dividend date is - N/A- N/A, $0 | ||||
| Earnings Report during this 30 day period? No Earnings Report is (~) date of - N/A- N/A | ||||
| Did this trade meet the Golden Rules? | ||||
| SP500 type | Earnings? | Dividend | Volume? | Open Interest? |
 | |  | | |
| Yes they are | No Earnings | Yes, but small | Yes they do | Yes > 100 |
| For me this trade meets most of my Golden Rules and because I like the stock and have no worries holding it Up or Down I'm going for this trade. They do give a dividend but it's nowhere near the 3% I usually like | ||||
| This trade has 2 typical outcomes | ||||
| CC - Outcome #1 - the stock moves above my strike price of $220 at expiration, I have my shares taken away and I make MAX gain for this trade 6.38% Cash on Cash investment for this 30 day trade | ||||
| CC - Outcome #2 - the stock does not move above my strike price of $220 at expiration, I do not have my shares taken away and I make only the option premium of $4.4 per share for this 30 day trade. I keep my shares. | ||||
| Further research with - Using charts for technical analysis, Dividend information and Earnings Report Date | ||||
| RSI, SUPPORT LINES | KELTNAR, OBV | DIVIDEND | EARNINGS REPORT | |
| View Chart-NVDA | View Chart-NVDA | Verify-NVDA | Verify-NVDA | |
 |  | No |
No
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| $0.00 | ||||
| Always look at a companies chart ... it tells a story and that story could be UP or DOWN | ||||
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| How I could 'Manage' this trade should the stock rise or fall prior to expiration | ||||
Covered Call possible outcome #1 - The stock moves and closes on expiration above my strike price. My shares will be given assigned to the Call Buyer, I will be given cash for my shares (strike price)
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Covered Call possible outcome #2 - The stock does not close at or above my strike by expiration, I will likely not have my shares taken from me. I keep my shares, I keep the Covered Call premium. Trade ends. Shares become available to trade.
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Covered Call possible outcome #3 - Regardless of where the stock moves during the Covered Call timeframe, a news event or Ex-Date prompts the Call buyer or market maker to take my shares before expiration. Most common situation, the stock has moved up and now trades near or above the strike price making it profitable to exercise the Call option early for the Call Buyer to collect the dividend.
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| Education Corner | ||||
| Great Covered Call video posted at | ||||
| Covered Call - Description - A covered call is a financial market transaction in which the seller of call options owns the corresponding amount of the underlying instrument, such as shares of a stock or other securities. ... writing (i.e. selling) a call generates income in the form of the premium paid by the option buyer. Source - https://en.wikipedia.org/wiki/Covered_call | ||||
| Disclaimer - Yes - at the time of this posting I do have a position in this equity. By posting this I am by no means recommending this equity and am not front running for its performance. I have risked my own money and am accountable for the trade results. | ||||
| Image credits - stockcharts.com | barchart.com | foolcdn.com | yahoo.com | earningswhispers.com | and me :) | ||||
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