| Brief Description of WHY I did this trade and my expectations for it |
| HERE WE GO AGAIN! Ok, I am not gonna say this trade isn't a pure quick cash trade ... I'm playing a little OTM strike in case ROKU does in fact hit earnings and the stock heads higher ... least I get the stock move and the $10.75 prem ... if the stock falls, I kick the $10.75 prem, the stock falls and I'm banking that it will be short lived, its why I did the 46 day expire so I give this a little time to run ... If it pops then it is what it is, my total return in this 4 month window will be 29% CoC and that CSP I did, it too will expire worthless so I collect that as well. We will see. |
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| MAX PROFIT PROJECTION - See below the profit on the other possible outcomes |
| COMPANY | SYMBOL | SHARES | PRICE | TOTAL COST |
| ROKU Inc. | ROKU | 100 | $131.31 | $13,131.00 |
| EXPIRATION DATE | DAYS | STRIKE | OPTION | CoC % GAIN |
| Mar-27 | 46 | $140.00 | $10.75 | 14.80% |
| DIVIDEND | DIVIDEND GAIN | OPTION GAIN | STOCK GAIN | TOTAL KRUM |
| $0.00 | $0.00 | $1,075.00 | $869.00 | $1,944.00 |
| All calculations above are based on collecting [ Stock move + CCW + DIV if offered] |
| No, they do not offer investors a dividend. |
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| Current Stock Price | Implied Volatility | Imp Vol (+) | Imp Vol (-) | DELTA |
| $131.31 | 84.00% | $186.46 | $76.16 | 0.44 |
| | $186.46 | | |
| $131.31 |  | With Implied Volatility being 0.42% to reach $186.4602 in this 46 day period, with this Covered CallStrike Im hoping the stock moves just 0.353820729571244% of that 0.84% Implied Volatility | |
| | $76.16 | | |
| 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 |
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| Important Trade Details |
| Trade details - 1 contract(s), Strike Price $140 , Premium of $10.75, with a 43917 expiration date receiving a total credit of $1075 per share |
| Already had 100 shares for $131.31 , $13131 , total investment. |
| The will be a 46 day trade |
| This Out the Money (OTM) Covered Call trade has a potential Cash On Cash Return of : |
| Covered Call - if shares are taken I make $19.44 per share, or 14.8 %- Annualized 142.2% |
| Covered Call - if shares are not taken option expires worthless I make just $10.75 per share, or 8.19 %- Annualized 78.64% |
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| No Dividend capture with a Cash Secured Put because I do not own the shares |
| Earnings Report during this 46 day period? Yes Earnings Report is (~) date of Feb-13th |
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| Did this trade meet the Golden Rules? |
| SP500 type | Earnings? | Dividend | Volume? | Open Interest? |
 |  | | |  |
| Big enough for me | Yes Earnings | No they do not | Yes they do | No < 100 |
| Notice that the ER date is this week and with this trade being some 46 days ... the stock will settle one way or the other ... my 100% expecation is that ER is good, stock heads higher, my shares are taken, we move on. |
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| This Covered Call trade has 2 typical outcomes |
| CC - Outcome #1 - the stock moves above my strike price of $140 at expiration, I have my shares taken away and I make MAX gain for this trade 14.8% Cash on Cash investment for this 46 day trade |
| CC - Outcome #2 - the stock does not move above my strike price of $140 at expiration, I do not have my shares taken away and I make only the option premium of $10.75 per share for this 46 day trade. I keep my shares. |
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| Further research with - Using charts for technical analysis, Dividend information and Earnings Report Date |
| RSI, SUPPORT LINES | KELTNAR, OBV | | DIVIDEND | EARNINGS REPORT |
| View Chart-ROKU | View Chart-ROKU | | Verify-ROKU | Verify-ROKU |
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| No | Yes |
| $0.00 | Feb-13th |
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| Always look at a companies chart ... it tells a story and that story could be UP or DOWN |
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| 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. |
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| Education Corner |
| Great Covered Call video posted at | |
| 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 |
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| 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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| 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. |
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| Image credits - stockcharts.com | barchart.com | foolcdn.com | yahoo.com | earningswhispers.com | and me :) |
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