NEW UCPTD Trade Alert - HD - Covered Call

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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, January 8, 2020
Covered Call Trade opened using a Standard Covered Call Strategy
NEW Covered Call position with Home Depot Inc. (HD) this week
TRADE KRUM! (see details below)		DAYS	Cash on Cash %	Annualized
$924.00		31	4.16%	49.01%
Brief Description of WHY I did this trade and my expectations for it
Been holding HD when I bought it at $215x ... haven't written a call on it yet and with it rallying above $221 I figured if I'm gonna buy this for CCW I need to start doing something so I did a nice 30day 4% trade should my shares be taken ... I calculate from the moment the trade begins and NOT from my stock price price... this should my shares be taken this will be an even btter CashonCash gain ... but for now, thats pie in the sky, lets see if it gets that.
Trade Breakdown with the 'Krums Calc'
COMPANY	SYMBOL	SHARES	PRICE	TOTAL COST
Home Depot Inc.	HD	100	$221.98	$22,198.00
STRIKE	OPTION	OPTION GAIN	STOCK GAIN	TOTAL KRUM
$230.00	$1.22	$122.00	$802.00	$924.00
DIVIDEND		CASH ON CASH KRUM %		ANNUALIZED GAIN
$0.00	$0.00	4.16%		49.01%
Yes, they offer investors a dividend but *NOT* during this trade timeframe
Current Stock Price	Implied Volatility	Imp Vol (+)	Imp Vol (-)	DELTA
$221.98	15.15%	$238.79	$205.17	0.22
		$238.79
$221.98			With Implied Volatility being 0.07575% to reach $238.794985 in this 31 day period, with this Covered CallStrike Im hoping the stock moves just 0.0396206189746824% of that 0.1515% Implied Volatility
		$205.17
Important Trade Details
Trade details - 1 contract(s), Strike Price $230 , Premium of $1.22, with a Feb-7th expiration date receiving a total credit of $122 per share
Already had 100 shares for $221.98 , $22198 , total investment.
The will be a 31 day trade
This Out the Money (OTM) Covered Call trade has a potential Cash On Cash Return of :
CC - If shares are taken away $9.24000000000001 per share, or 4.16 %- Annualized 49.01%
CC - If my shares are not taken away $1.22 per share, or 0.55 %- Annualized 6.47%
Dividend during this 40 day period? No EX-Dividend date is - N/A- N/A, $0
Earnings Report during this 31 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 they do	Yes they do	No < 100
The Open Interest of 39 isn't the best but because HD is such a large company buyers and sellers will be coming in near expiration should its stock move torwards the strike ...everything is checking out for the Golen Rules to reduce the risk on this trade
This Cash Secured Put trade has 3 typical outcomes
CSP - Outcome #1 - the stock does not close at or below the strike price. If this Cash Secured Put option trades above the strike price the CSP buyer will not give me the shares then what they can sell them for on the open market. I keep the premium and am not assigned the shares. Trade expires worthless
CSP - Outcome #2 - the stock does close at or below the strike price causing me to be assigned the shares are my strike price. I am assigned the shares and I keep the entire CSP premium I was paid.
CSP - Outcome #3 - Possible early assignment - the stock has traded below the strike price and for whatever reason the CSP buyer executes the trade, causing early assignment. I will be assigned the shares and I keep the entire CSP premium. The trade ends.
Further research with - Using charts for technical analysis, Dividend information and Earnings Report Date
RSI, SUPPORT LINES	KELTNAR, OBV		DIVIDEND	EARNINGS REPORT
View Chart-HD	View Chart-HD		Verify-HD	Verify-HD
			No	No
			$0.00
Always look at a companies chart ... it tells a story and that story could be UP or DOWN
How I could 'Manage' this trade should the stock rise or fall prior to expiration
I could manage this Covered Call - #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)
I could manage this Covered Call - #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.
I could manage this Covered Call - #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.
Education Corner
Great Covered Call video posted at
Cash Secured Put - Description -The cash-secured put involves writing an at-the-money or out-of-the-money put option and simultaneously setting aside enough cash to buy the stock. The goal is to be assigned and acquire the stock below today's market price. Whether or not the put is assigned, all outcomes are presumably acceptable. The premium income will help the net results in any event. The investor is bullish on the underlying stock and hopes for a temporary downturn in its price. If the stock drops below the strike, the put may be assigned. That would allow the put writer to buy the stock at the strike price. The effective purchase would be even lower: strike price less the premium received. There are two principal risks. First, the stock might not only dip but plummet well below the strike price. The investor must be comfortable with the strike price as an acceptable long-term acquisition price, no matter how low the market goes. Source - https://www.optionseducation.org/strategies/all-strategies/cash-secured-put
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.
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