| All rights reserved - Core Position Trading, LLC-2023 | |||||||||
 | NEW PMCC TRADE | ||||||||
| STANDARD POOR MAN'S COVERED CALL TRADE IS NOW | OPEN | ||||||||
| DAYS | THIS NEW PMCC CCW TRADE BEGINS AND ENDS | ||||||||
| 21 | December 8, 2023 | December 29, 2023 | |||||||
MS |  | TIME AND DATE STAMP | |||||||
| Friday, December 8, 2023 | |||||||||
| 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'. | |||||||||
| View Chart-MS | |||||||||
| COVERED CALL | |||||||||
| DETAILS FOR THIS COVERED CALL TRADE | |||||||||
| Today a NEW Covered Call position was opened using Morgan Stanley (MS) | |||||||||
| MS was trading for $82.26 a share when I placed this trade. I then sold (10) Covered Call contract(s) using/controlling (1000) shares for the December-29-2023 Expiration Date, $85.00 Strike Price receiving a Premium of $0.63 or $630 in up front cash flow to begin this trade. I used a LIMIT ORDER trying to gain the MID price which in this case I was able. | |||||||||
| PROJECTED PROFIT POTENTIAL (IF SHARES ARE NOT TAKEN) | |||||||||
| Stock Price - placed | Strike Price | Total Prem$ | Contracts | ||||||
| $82.26 | Dec-8 | $0.63 | 10 | ||||||
| Strike Price | Expire | Days | Projected Cash Flow | ||||||
| $85.00 | Dec-29 | 21 | $630.00 | ||||||
| PREMIUM ONLY CALCULATIONS | Projected CoC% gain | ||||||||
| This is the money invested > | $31,110.00 | 2.03% | |||||||
| WHAT IF YOUR SHARES ARE TAKEN? (CLOSEOUT LEAPS SOLD) | |||||||||
| If my shares are taken, that means the stock has moved above my strike price of $85 which means I will make both the Covered Call Premium of $0.63 and I will basically have to SELL my LEAPS call option which is projected to be priced at $30.22. This will result in a LOSS with my LEAPS > I will have used this LEAPS call option for (5) trades. | |||||||||
| TOTAL CLOSEOUT RETURNS ON MONEY INVESTED | |||||||||
CLOSEOUT equals LEAPS sold + any Covered Call premiums collected | CLOSEOUT Projections | CLOSEOUT CoC% +/- | |||||||
| $3,280.00 | 10.54% | ||||||||
| General plan for my Covered Call Write Cash on Cash % investments > I like to generate a 3% Cash on Cash return on my money invested ... depending on the timeframe ... 1 week, 1% is ok but if 30 days I want more like 3 to 4% preferred | |||||||||
| COMMENTARY AS TO WHY I OPENED THIS TRADE | |||||||||
| WHY I OPENED this CCW on MS > Morgan Stanley (MS) has started to move higher and I'm thinking of just getting out of my current PMCC with a profit ... if shares are taken I would make money but would lose money on the LEAPS Call Option (the projected LEAPS value will be $30.21) losing money on the LEAPS Call Options but the covered calls will make it profitable > Where does my LEAPS currently stand? (-) > The stock is trading under what would be my 'cost basis' for the shares (ie, the LEAPS is down) so if my shares are taken I will lose money on the LEAPS Call Option | ||||||||
| > as with every trade, I will manage this trade as it approaches expiration ... buying back the option if it adheres to my -50% and 0.10 cent guidelines. -50% guideline being, such this option price fall 50% or more in the first 2 weeks I will buy back and look to roll the option - if the this option falls to 0.10 or less (in most cases) I will buy back the option and roll it for another credit if it presents itself. | |||||||||
| GOLDEN RULES OF COVERED CALL WRITING (AVOIDING EARNINGS) | |||||||||
| WILL THEY HAVE EARNINGS? | Verify-MS | NO | |||||||
| Try to avoid Earnings Reports > Earnings can be a stocks most volitile moment so its important to try to avoid writing a covered call thru or near earnings. Even great stocks can move +/- 10% on earnings | |||||||||
| GOLDEN RULES OF COVERED CALL WRITING (DIVIDEND EX-DATE) | |||||||||
| WILL COMPANY HAVE AN EX-DATE | Verify-MS | NO | |||||||
| Try to avoid EX-Dates > Companies that have dividends will trade differently in and around its EX-Date ... keep this in mind when writing a covered call as you might have your shares taken if its profitable for the Call Buyer. | |||||||||
| -50% , -10% RULES (PRICES WHEN I MIGHT BUY BACK) | |||||||||
| Premium | -50% Rule | 10% Rule | |||||||
| $0.63 | $0.32 | $0.06 | |||||||
| What does this mean? If within the first week the option falls 50% I will buy back the option and look to roll for another credit ... if the option falls to 10% of the value, I will buy back and roll. | |||||||||
| THIS TRADE WAS PLACED INSIDE MY NON-TAXABLE IRA ACCOUNT | |||||||||
| LEAPS CALL OPTION | |||||||||
| DETAILS OF THE LEAPS CALL OPTION I PURCHASED | |||||||||
| Below is the LEAPS Call Option purchase information. The performance part is based on a DELTA MOVE in the LEAPS vs the ACTUAL stock move so the numbers are as close as I can get them as DELTAs can change | |||||||||
| Symbol | Expiration | Strike | Investment | ||||||
| MS | Jan2024 | $55.00 | -$31,110.00 | ||||||
| Contracts | Controlling shares | Delta | Paid? | ||||||
| 10 | 1000 | 0.97 | -$31.11 | ||||||
| The Current LEAPS value > | Current Value | $27.55 | |||||||
| I AM CURRENTLY (+) or (-) this amount starting this trade > | -$3.56 | ||||||||
| The LEAPS value will move higher > | Projected Value | $30.22 | |||||||
| The 'Projected Value' is based on where the LEAPS is valued at the start of this trade and where the LEAPS value will be at the strike price. | |||||||||
| USING THIS LEAPS CALL OPTION, HOW MUCH PREMIUM ? | |||||||||
| Below are all of the Covered Calls I have sold while owning this position. It does includes the current active Covered Call Trade. | |||||||||
| Date Opened | Date Closed | Cash Flow | CoC% +/- | ||||||
| Aug-30 | Sep-6 | $1,060.00 | 3.41% | ||||||
| Sep-8 | Sep-26 | $1,050.00 | 3.38% | ||||||
| Sep-27 | Oct-3 | $1,010.00 | 3.25% | ||||||
| Nov-15 | Dec-5 | $420.00 | 1.35% | ||||||
| Dec-8 | Dec-29 | $630.00 | 2.03% | ||||||
| 0.00% | |||||||||
| 0.00% | |||||||||
| 0.00% | |||||||||
| 0.00% | |||||||||
| 0.00% | |||||||||
| 0.00% | |||||||||
| $4,170.00 | 13.40% | ||||||||
| TRACK THE PROGRESS OF EVERY TRADE - LINK BELOW | |||||||||
| https://docs.google.com/spreadsheets/d/e/2PACX-1vTtd258AIR3g3VLFuQ9O1jqd8H_pguxwdhNPt1BOdBKOIzayuPLKegm1YSXNd0MXx4v8GthCoroZ_hO/pubhtml?gid=1613363230&single=true | |||||||||
| - | |||||||||
| 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. | |||||||||
| This is not a recommendation to buy or sell this stock | |||||||||
| Yes, at the time of this trade I do own a position (LEAPS Call Option) | |||||||||
| Trading stocks and options have risk. Required reading prior to placing money at risk with options is the ODD which is posted below. "The Characteristics & Risks of Standardized Options" Prior to buying or selling an option, investors must read a copy of the Characteristics & Risks of Standardized Options, also known as the options disclosure document (ODD). It explains the characteristics and risks of exchange traded options. | |||||||||
| Feel free to email me if you have questions and/or concerns about this post - corepositiontrading@gmail.com - I usually will get back with you in 48 hours or sooner | |||||||||
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