Potash Corp. was on my recent watchlist for a potential covered call trade. This stock has a trend of rising for 4wks from the end of July to the end of August. Despite POT’s recent decline of 23%, it appears to be rising into the trend. Once I saw an entry point on my chart, I picked up positions in two of my accounts.
Trading Leg
I purchased 2 Sep 40 calls @ $0.15. My exit is $0.35 with a loss limit of $0.10. The stock historically moves 8 – 10% during this trend so if needed I may adjust my exit to ride the trendline.
Here’s a look at my potential profit:
# Shares or Contracts | Purch Price | Capital Out | Sell Price | Capital In | Comm & Fees | Gain / Loss |
% Gain & Loss |
2 Sep 40 Calls | 0.15 | 30.00 | 0.35 | 70.00 | 10.00 | 30.00 | 100.0% |
My charts for this trade:
Retirement Leg
I purchased 100 shares at $30.49. I’m going to sit and just let these rise and look to sell calls against them later. I may even add 100-200 more shares depending on how the stock performs.
Here’s a look at my cost so far:
# Shares or Contracts | Purch Price | Capital Out | Sell Price | Capital In | Comm & Fees | Gain / Loss |
% Gain & Loss |
100 shares | 30.49 | 3,049.00 | – | – | 2.95 | – | -% |
My charts for this trade:
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Curious…why do you purchase OTM call options? Is there a reason besides the price
No, I was just being cheap but I feel the stock will rise enough to move my position. You know the rules… I should have purchased the $30.