| All rights reserved - Core Position Trading, LLC-2021 | ||||
 | NEW CCW TRADE | |||
| Covered Call Trade opened using a Standard Covered Call (~30d) | ||||
| NEW Covered Call position was opened on | ||||
| TIME AND DATE STAMP | Monday, October 4, 2021 | |||
Bristol Myers |  | |||
| 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/trade. Think of it like this, I'm 'Showing you the World thru my Eyes'. | ||||
| FOR THIS TRADE THE SHARES I'VE USED: | ||||
| COST BASIS? | $61 | I already owned these shares prior to this trade | ||
| BASIC TRADE DETAILS (If Shares Taken) | ||||
| EXPIRE | STRIKE | PREMIUM | SHARES | $ PROFIT |
| Nov-5 | $61.00 | $1.54 | 300 | $462.00 |
| REMEMBER, ALL CALCULATIONS FOR THIS TRADE ARE BASED ON WHERE THE STOCK WAS TRADING WHEN THIS TRADE WAS PLACED AND *NOT* MY STOCK PURCHASE PRICE. | ||||
| BRIEF EXPLANATION WHY I DID THIS TRADE | ||||
| MINDSET WHEN OPENED - Below I explain why I did this trade | ||||
| CCW - Starting a new Wheel trade with a beaten down Bristol Myers ... I was assigned the shares @ $61 ... my first CCW is ATM of my cost basis of $61 ... this $1.54 premium actually is more then I thought I could get ... so this 1, 2 punch trade is starting just as I expected. | ||||
| WHEN TRADE CLOSES - I explain my thoughts on how this closed out. | ||||
| Trade is OPEN - I will add commentary when this trade closed | ||||
| THIS TRADE TRADE BEGINS AND ENDS | ||||
| 32 | October 4, 2021 | November 5, 2021 | ||
| MAX PROFIT STOCK MOVE + PREMIUM + DIVIDEND | ||||
| MAX PROFIT | STOCK GAIN | PREMIUM | DIVIDEND? | CASH ON CASH % |
| $462.00 | $0.00 | $462.00 | $0.00 | 2.52% |
| Max Profit means that I make all of this and my shares have been taken. | ||||
| PREMIUM PROFIT ONLY (shares are not taken) | ||||
| PREMIUM ONLY | OPTION GAIN | DIVIDEND? | CASH ON CASH % | |
| $462.00 | $462.00 | $0.00 | 2.52% | |
| Premium Only means I didn't have my shares taken. Trade expired or I bought back | ||||
| DETAILED TRADE INFORMATION | ||||
| COMPANY | SYMBOL | SHARES | PRICE@TRADE | TOTAL COST |
| Bristol Myers | BMY | 300 | $61.00 | $18,300.00 |
| EXPIRATION DATE | DAYS | STRIKE | OPTION | OPTION GAIN |
| Nov-5 | 32 | $61.00 | $1.54 | $462.00 |
| DIVIDEND | DIVIDEND GAIN | STOCK GAIN | CoC % GAIN | TOTAL KRUM |
| $0.00 | $0.00 | $0.00 | 2.52% | $462.00 |
| All calculations above are based on collecting [ Stock move + CCW + DIV if offered] | ||||
| Did this trade meet the Golden Rules? | ||||
| SP500 type | Earnings? | Dividend | Volume? | Open Interest? |
 |  | | | |
| Yes they are | Yes they do | No they do not | Yes they do | No they do not |
| Open Interest > | 55 | |||
| The finer details of this trade | ||||
| Trade details - 3 contract(s), Strike Price $61 , Premium of $1.54, with a > Jul-16 < expiration date receiving a total credit of $462 per share | ||||
| I Purchased 300 shares for $61 on 44473 , $18300 , total investment. | ||||
| The will be a 32 day trade | ||||
| This Out of Money (OTM) Covered Call trade has a potential Cash On Cash Return of : | ||||
| Covered Call - if shares are taken I make $1.54 per share, or 2.52459016393443 %- Annualized 28.796106557377% | ||||
| Covered Call - if shares are not taken option expires worthless I make just $1.54 per share, or 2.52459016393443 %- Annualized 28.7961065573771% | ||||
| Downside Protection summary (if this trade goes bad) | ||||
| CURRENT STOCK PRICE | STRIKE PRICE | D/P PRICE | $ PROTECTION | % PROTECTION |
| $61.00 | $61.00 | $59.46 | $1.54 | 2.52% |
| Breakeven price? (Stock Price - Prem - Div = Downside breakeven Price) | $59.46 | |||
| What's the expected move in the stock? | ||||
| Current Stock Price | Implied Volatility | Imp Vol (+) | Imp Vol (-) | DELTA |
| $61.00 | 27.89% | $69.51 | $52.49 | 0.4258 |
| Delta = the expected % chance the stock gets to the Strike | 0.4258 | |||
| $69.51 | ||||
| $61.00 |  | With Implied Volatility being 0.13945% to reach $69.50645 in this 32 day period, with this Covered CallStrike Im hoping the stock moves just 0.13945% of that 0.2789% Implied Volatility | ||
| $52.49 | ||||
| What is Implied Volatility? - Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy. - source: Zacks Investment Research | ||||
| This Covered Call trade has 2 typical outcomes | ||||
| CC - Outcome #1 - the stock moves above my strike price of $250 at expiration, I have my shares taken away and I make MAX gain for this trade 5.64836255375455% Cash on Cash investment for this 56 day trade | ||||
| CC - Outcome #2 - the stock does not move above my strike price of $250 at expiration, I do not have my shares taken away and I make only the option premium of $5.5 per share for this 56 day trade. I keep my shares. | ||||
| Further research with - Using charts for technical analysis, Div info and Earnings Report Date | ||||
| RSI, SUPPORT LINES | KELTNER, OBV | DIVIDEND | EARNINGS REPORT | |
| View Chart-BMY | View Chart-BMY | Verify-BMY | Verify-BMY | |
 | No | Yes | ||
| Oct-23th | |||
| How I could 'Manage' this trade? | ||||
| 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. | ||||
| Selling Premium Education Corner | ||||
| 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 own shares. I am by no means recommending this stock for purchase | ||||
| Remember, the content of this site is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Please read the full disclaimer posted below and visit cptdashboard.com for my privacy policy. | ||||
| Image credits - stockcharts.com | barchart.com | foolcdn.com | yahoo.com | earningswhispers.com | ||||
| © 2021 Core Position Trading, LLC and the CPT Dashboard - All Rights Reserved | Disclaimer | |||
| This area below is used ONLY IF I purchased a Protective Put as a part of this trade. The combination of the Covered Call Write CREDIT and the Protective Put purchase DEBIT are calculated as one trade. | ||||
| Covered Call with a Protective Married Put (Collar) | ||||
| Price @ trade | CCW Strike | CCW Prem | Put Strike | Put Cost |
| N/A | N/A | N/A | ||
| Option Profit/Cost/Total | #VALUE! | $0.00 | ||
| Cost Breakdown for this insurance: | $0.00 | reducing my profit | #VALUE! | |
| Yes - I have purchased a protective put for this trade (details below) | ||||
| STRIKE | N/A | #REF! | ||
| STOCK PURCHASE $ | True downside protection for the CCW is | I tried to buy the Protective Put @ the downside protection price (not totally perfect) | ||
| PROTECTIVE PUT | $59.46 | |||
| Losing $ on stock purchase | Making money on the Protective Put | |||
| What is a Protective Put - A protective put is a risk-management strategy using options contracts that investors employ to guard against the loss of owning a stock or asset. The hedging strategy involves an investor buying a put option for a fee, called a premium. | ||||
| What is the Covered Call with a Married Put - A stock owner will SELL or Write a Covered Call and then BUY a Put options for downside protection. | ||||
| © 2021 Core Position Trading, LLC and the CPT Dashboard - All Rights Reserved | Disclaimer | |||
