| All rights reserved - Core Position Trading, LLC-2022 | ||||
 | NEW CCW TRADE | |||
| Covered Call Trade opened using a Standard Covered Call (~30d) | ||||
| NEW Covered Call position was opened on | ||||
| TIME AND DATE STAMP | Tuesday, March 15, 2022 | |||
Southern Co. |  | |||
| 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'. | ||||
| BASIC COVERED CALL TRADE DETAILS (If Shares Taken) | ||||
| EXPIRE | STRIKE | PREMIUM | SHARES | $ PROFIT |
| Apr-14 | $70.00 | $1.20 | 500 | $600.00 |
| 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 - Southern Co is a Buy & Hold stock for me where I hold shares for some stock appreciation and collet its dividend. During the companies off events months I like selling covered calls when the stock is at the top of its trading range ... SO @ $68.76 is right at resistance ... I like this $70 strike for a Double my Dividend trade and expect to NOT have my shares taken. REMEMBER, this is a B&H stock I use to pick up some income during the companies non event months so I will manage this trade to not have my shares taken ... so this is 100% possible premium profit. USING BUY & HOLD STOCKS FOR 'EXTRA' INCOME I talked about this for years ... one of things I like to do to generate extra Cash on Cash % gains with my Buy & Hold shares in the portfolio is to write covered calls on the shares during the companies 'non-event' months ... mainly to avoid any violent price moves up that would challenge my strike as the goal is not to have my shares taken. Southern Co (SO) is one I've used many times for this. I like to let the stock trade in the TOP of its current trading cycle (the expectation is that the stock will start to peter out and peel back) ... so by writing a covered call at the TOP of its range, it's more likely the covered call strike will not be challenged and I will keep the shares and keep the premium adding to my income for the stock. I try to write covered calls with strike prices that will produce a premium equal to the stocks quarterly dividend ... typically a 25 Delta OTM Strike ... where I feel like I'm 'Doubling my Dividends' while I own the shares. In the trade just posted below ... I feel SO is at the TOP of its range and have done a CLOSER to the money CCW ... yes, will test my theory of a peel back ... but this trade is a great example of what I'm trying to achieve. | ||||
| 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 | ||||
| 30 | March 15, 2022 | April 14, 2022 | ||
| PREMIUM PROFIT ONLY (shares are not taken) | ||||
| PREMIUM ONLY | OPTION GAIN | DIVIDEND? | CASH ON CASH % | |
| $600.00 | $600.00 | $0.00 | 1.75% | |
| 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 |
| Southern Co. | SO | 500 | $68.76 | $34,380.00 |
| EXPIRATION DATE | DAYS | STRIKE | OPTION | OPTION GAIN |
| Apr-14 | 30 | $70.00 | $1.20 | $600.00 |
| DIVIDEND | DIVIDEND GAIN | STOCK GAIN | CoC % GAIN | TOTAL KRUM |
| $0.00 | $0.00 | $620.00 | 3.55% | $1,220.00 |
| All calculations above are based on collecting [ Stock move + CCW + DIV if offered] | ||||
| The finer details of this trade | ||||
| Trade details - 5 contract(s), Strike Price $70 , Premium of $1.2, with a > Sep-24 < expiration date receiving a total credit of $600 per share | ||||
| Already had 500 shares for $68.76 , $34380 , total investment. | ||||
| The will be a 30 day trade |
| Downside Protection summary (if this trade goes bad) | ||||
| CURRENT STOCK PRICE | STRIKE PRICE | D/P PRICE | $ PROTECTION | % PROTECTION |
| $68.76 | $70.00 | $67.56 | $1.20 | 1.75% |
| Breakeven price? (Stock Price - Prem - Div = Downside breakeven Price) | $67.56 | |||
| 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 | ||||
| © 2022 Core Position Trading, LLC and the CPT Dashboard - All Rights Reserved | Disclaimer | |||
