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| 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. Think of it like this, I'm showing you the world thru my eyes. | ||||
| NEW TRADE ALERT |  | |||
| Monday, December 23, 2019 | ||||
| Covered Call Trade opened using a Standard Covered Call Strategy | ||||
 | ||||
| NEW Covered Call position with 3M Corp (MMM) this week | ||||
| TRADE KRUM! (see details below) | DAYS | Cash on Cash % | Annualized | |
| $1,722.00 | 29 | 4.85% | 61.00% | |
| Brief Description of WHY I did this trade and my expectations for it | ||||
| I have waiting for 3M to get above that $175 number so I could write this covered call ... my cost basis is around $161 on my shares not counting all the covered calls and cash secured puts premiums I've added since holding it. I think it does continue to go higher and in fact its +IV suggests the $190+'s ... but hey, I'll take $185 and we look to find another Dividend payer ... I'll be in and out of MMM all year if all goes well ... love its KC trading range. Not to much, not to little... easy to follow like Chevron. | ||||
| Trade Breakdown with the 'Krums Calc' | ||||
| COMPANY | SYMBOL | SHARES | PRICE | TOTAL COST |
| 3M Corp | MMM | 200 | $177.64 | $35,528.00 |
| STRIKE | OPTION | OPTION GAIN | STOCK GAIN | TOTAL KRUM |
| $185.00 | $1.25 | $250.00 | $1,472.00 | $1,722.00 |
| DIVIDEND | CASH ON CASH KRUM % | ANNUALIZED GAIN | ||
| $0.00 | $0.00 | 4.85% | 61.00% | |
| No, they do not offer investors a dividend during this period. (They do have one) | ||||
| Current Stock Price | Implied Volatility | Imp Vol (+) | Imp Vol (-) | DELTA |
| $177.64 | 17.82% | $193.47 | $161.81 | 0.2905 |
| $193.47 | ||||
| $177.64 |  | With Implied Volatility being 0.0891% to reach $193.467724 in this 29 day period, with this Covered CallStrike Im hoping the stock moves just 0.0476678901148389% of that 0.1782% Implied Volatility | ||
| $161.81 | ||||
| Important Trade Details | ||||
| Trade details - 2 contract(s), Strike Price $185 , Premium of $1.25, with a Jan-24th expiration date receiving a total credit of $250 per share | ||||
| Already had 200 shares for $177.64 , $35528 , total investment. | ||||
| The will be a 29 day trade | ||||
| This Out the Money (OTM) Covered Call trade has a potential Cash On Cash Return of : | ||||
| CC - If shares are taken away $8.61000000000001 per share, or 4.85 %- Annualized 61% | ||||
| CC - If my shares are not taken away $1.25 per share, or 0.7 %- Annualized 8.86% | ||||
| Dividend during this 29 day period? No EX-Dividend date is - N/A- N/A, $0 | ||||
| Earnings Report during this 29 day period? No Earnings Report is (~) date of - N/A- N/A | ||||
| Did this trade meet the Golden Rules? | ||||
| SP500 type | Earnings? | Dividend | Volume? | Open Interest? |
 | | | |  |
| Yes they are | No Earnings | Yes they do | Yes they do | No > 100 |
| Like I mentioned above, been waiting to use 3M for a nice little Krum ... I do think my shares will be taken if the stock market keeps being bought up into 2020 ... this is a ~30 trade and with the Ex-Date being in Feb, this will prob go to expiration so depending where the stock is I might buy back the option and reboot or roll for another credit holding thru the Ex-Date to collect the FAT dividend again :) | ||||
| This Cash Secured Put trade has 3 typical outcomes | ||||
| CC - Outcome #1 - the stock moves above my strike price of $185 at expiration, I have my shares taken away and I make MAX gain for this trade 8.9% Cash on Cash investment for this 29 day trade | ||||
| CSP - Outcome #2 - the stock falls UNDER my strike price of $185 I have to make a decision, either be assigned the shares at my strike price or buy back the option at a HIGHER price and taking the loss | ||||
| Further research with - Using charts for technical analysis, Dividend information and Earnings Report Date | ||||
| RSI, SUPPORT LINES | KELTNAR, OBV | DIVIDEND | EARNINGS REPORT | |
| View Chart-MMM | View Chart-MMM | Verify-MMM | Verify-MMM | |
 |  | No |
No
| |
| $0.00 | ||||
| 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. | ||||
| 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 | ||||
| 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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