{"id":7720,"date":"2020-05-26T12:52:24","date_gmt":"2020-05-26T16:52:24","guid":{"rendered":"http:\/\/www.mainstbeatswallst.com\/?page_id=7720"},"modified":"2020-05-26T12:55:32","modified_gmt":"2020-05-26T16:55:32","slug":"in-the-money-peloton-covered-call","status":"publish","type":"page","link":"https:\/\/www.mainstbeatswallst.com\/?page_id=7720","title":{"rendered":"In-the-Money Peloton Covered Call"},"content":{"rendered":"

I don’t know if I did an In-the-Money<\/a><\/span> Covered Call since the inception of Main Street beats Wall Street<\/strong>. However, it’s not the first one I ever did. Clearly I don’t do a lot of these, but this one I love!<\/p>\n

An In-the-Money Covered Call means I bought the stock and I sold a Call with a Strike Price lower than the stock price. Let me explain using the trade I just made as an example.<\/p>\n

I bought 1000 shares of Peloton (PTON) at $43.40. Then I sold 10 Calls with the Strike Price of $43. At first you’ll think, why did he do that? If he gets assigned he’ll lose 40\u00a2 or $400 on the stock sale. And you would be correct! But we didn’t go over the Call Option I sold and the premium I received. Before we do that let me show you the trade:<\/p>\n

Buy 1000 Shares PTON @ $43.40<\/strong><\/h4>\n

Sell to Open 10 PTON 5\/29\/20 $43.00 C @ $1.65 (+$1650)<\/strong><\/h4>\n

Notice how high the premium is, $1.65. A premium of $1.65 on a $43.40 stock is a return of 3.8%. In one week, that’s great!<\/p>\n

With this In-the-Money Covered Call I bought the stock at $43.40 and I’m willing to sell it at $43 and lose 40\u00a2. The reason I did this is the $43 premium was higher than the $44 or $44.50 premiums. I’m willing to take a lose on the stock for the higher premium.<\/p>\n

If I get assigned I’ll lose $400 on the stock sale, but because of the high premium I locked in $1650. If there’s an assignment I will profit $1250. This is what I would like to happen. If it does, my rate of return, with the premium and the lose on the stock sale, will still be 2.88%. I love this trade! The trade gets a Risk Factor 1<\/strong>.<\/p>\n

If I’m not assigned, I’ll keep the 1.65 premium and keep the stock, and my Rate of Return will be the 3.8%. But I’ll still own the stock at a lower price. This is why I want an assignment.<\/p>\n

When I went into this trade I started with 2000 shares. the buying of the 2000 shares took too much of my margin so I decided to sell 1000 of the shares 5 minutes later. I got $43.60. In that 5 minutes I made $200 on that 1000 shares lol.<\/p>\n

Buy 1000 Shares PTON @ $43.40<\/strong><\/p>\n

Sold 1000 Shares PTON @ $43.60<\/strong><\/p>\n

Profit +$200<\/strong><\/h4>\n
\n

I also bought a 10 contract LEAPS on Marvell (MRVL). I sold a MRVL LEAPS last week with a nice profit. I decided to get back in.<\/p>\n

Buy to Open 10 MRVL 1\/21\/22 $32.00 C @ $6.50 (Delta .57)<\/strong><\/p>\n

Marvell’s earnings come out this Thursday. I hope they beat the Street estimates. If not I have a long time to recover.<\/p>\n

Successful Trading,<\/p>\n

Steve<\/p>\n

The Options Coach<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

I don’t know if I did an In-the-Money Covered Call since the inception of Main Street beats Wall Street. However, it’s not the first one I ever did. Clearly I don’t do a lot of these, but this one I love! An In-the-Money Covered Call means I bought the stock and I sold a Call […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-7720","page","type-page","status-publish","hentry"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/P75MP0-20w","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/7720","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7720"}],"version-history":[{"count":2,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/7720\/revisions"}],"predecessor-version":[{"id":7724,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/7720\/revisions\/7724"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}