| All rights reserved - Core Position Trading, LLC-2024 | |||||||||
 | NEW PMCC TRADE | ||||||||
| STANDARD POOR MAN'S COVERED CALL TRADE IS NOW | OPEN | ||||||||
| FIRST TRADE USING THIS LEAPS CALL OPTION | |||||||||
| DAYS | THIS NEW PMCC CCW TRADE BEGINS AND ENDS | ||||||||
| 29 | August 8, 2024 | September 6, 2024 | |||||||
MRK |  | TIME AND DATE STAMP | |||||||
| Thursday, August 8, 2024 | |||||||||
| 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'. | |||||||||
| TRACK THE ENTIRE TRADE PROGRESS HERE > Click Link | View Chart-MRK | ||||||||
| UNIQUE TRADE IDENTIFIER | MRK1152 | ||||||||
| COVERED CALL | |||||||||
| DETAILS FOR THIS COVERED CALL TRADE | |||||||||
| Today a NEW Covered Call position was opened using (MRK) | |||||||||
| Merck & Co Inc was trading for $112.87 a share when I placed this trade. I then sold (5) Covered Call contract(s) using/controlling (2) shares for the September-6-2024 Expiration Date, $115.00 Strike Price receiving a Premium of $2 or $1000 in up front cash flow to begin this trade. I used a LIMIT ORDER trying to gain the MID price which in this case I was able. | |||||||||
| PROJECTED PROFIT POTENTIAL (IF SHARES ARE NOT TAKEN) | |||||||||
| Stock Price - placed | Strike Price | Total Prem$ | Contracts | ||||||
| $112.87 | Aug-8 | $2.00 | 5 | ||||||
| Strike Price | Expire | Days | Projected Cash Flow | ||||||
| $115.00 | Sep-6 | 29 | $1,000.00 | ||||||
| PREMIUM ONLY CALCULATIONS | Projected CoC% gain | ||||||||
| This is the money invested > | $22,000.00 | 4.55% | |||||||
| 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 $115 which means I will make both the Covered Call Premium of $2 and I will basically have to SELL my LEAPS call option which is projected to be priced at $-44. This will result in a profit as my LEAPS will be sold higher then where I bought it. I will have used this LEAPS call option for (29) trades. | |||||||||
| TOTAL CLOSEOUT RETURNS ON MONEY INVESTED | |||||||||
CLOSEOUT equals LEAPS sold + any Covered Call premiums collected | CLOSEOUT Projections | CLOSEOUT CoC% +/- | |||||||
| $2,021.97 | 9.19% | ||||||||
| 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 PMCC Trade on > (Merck & Co Inc) | |||||||||
| This trade on MRK starts out as a > (29) day trade where Im trying to capture anywhere from 3% - 5% for a monthly Covered Call Trade. This trade will make $1000 dollars which represents 4.5% premium profit on money invested. Should my shares be taken I could make more, break even of lose money based on where my LEAPS Call Option is priced (see below for those calculations) | |||||||||
| Further commentary and feelings on this trade | |||||||||
| MERCK (MRK) has been trading near $125/$130 over the past 6 months and with earnings being rather good and with the stock falling off after earnings I'm a little surprised that it fell this far so I'm going to get involved now with a poor man's covered call picking up five leaps call options using the 96 Delta LEAPS and we're going to do this 30-day covered call which the premium is 4.6% and if my Shares are taken away and MRK finishes at or near $115 I will make 8.6% in 29 days > I believe Merck is a sideways to slightly higher trade over the next 29 days | |||||||||
| With this new Strike Price, what is the projected LEAPS Value? | |||||||||
| If this trades as its projected, I will make money on the LEAPS Call Option > IF my shares are taken at this strike price, my expected LEAPS value will be $46.043948 , my cost basis is $-44 | |||||||||
| GOLDEN RULES OF COVERED CALL WRITING (AVOIDING EARNINGS) | |||||||||
| WILL THEY HAVE EARNINGS? | Verify-MRK | NO | |||||||
| Try to avoid Earnings Reports > Earnings can be a stocks most volatile 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-MRK | 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 | |||||||
| $2.00 | $1.00 | $0.20 | |||||||
| 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 | |||||||||
 | CLOSED TRADE ENDS | NEW TRADE BEGINS |  | |||||||
| 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 | ||||||
| MRK | Jan2024 | $70.00 | $22,000.00 | ||||||
| Contracts | Controlling shares | Delta | Paid? | ||||||
| 5 | 500 | 0.9596 | -$44.00 | ||||||
| The Current LEAPS value > | Current Value | $44.00 | |||||||
| I AM CURRENTLY (+) or (-) this amount starting this trade > | $0.00 | ||||||||
| The LEAPS value will move higher > | Projected Value | $46.04 | |||||||
| 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. | |||||||||
| THE INITIAL TRADE SETUP FOR THIS TRADE | |||||||||
| - | |||||||||
| 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 | Expire/Closed | Cash Flow | CoC% +/- | ||||||
| Aug-8 | Sep-6 | $1,000.00 | 4.55% | ||||||
| 0.00% | |||||||||
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| $1,000.00 | 4.55% | ||||||||
| 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 | |||||||||
| Disclaimer - Yes - at the time of this posting I do own LEAPS Call Options. That could mean in my taxable , non-taxable accounts or both. I am by no means recommending this stock for purchase | |||||||||
| 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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