Established New Covered Call on NASDAQ: VXRT - 5.44% potential gain in 7 days
On May 20, 2022, I bought 100 shares of NASDAQ:VXRT stock paying $3.49 per share and simultaneously sold 1 covered call on them with a strike price of $3.5 and expiry next Friday. Credit received $25
In the past, I’ve been selling credit spreads on VXRT with mixed success. What I know about it - is biotech, volatile biotech stock under $5 with juicy options premiums.
Vaxart, Inc. is an American biotechnology company focused on the discovery, development, and commercialization of oral recombinant vaccines administered using temperature-stable tablets that can be stored and shipped without refrigeration, eliminating the need for needle injection
This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.
here is the trade setup:
BOT 100 VXRT Stock 3.49 USD
SLD 1 VXRT MAY 27 '3.5 Call Option 0.25 USD
I bought 100 shares at $3.49 apiece, in total paying $349, and sold 1 covered call with next Friday’s expiry, for which I received a premium of $25 (before commissions)
What happens next?
On the expiry date, May 27, 2022, VXRT is trading under $3.5 per share - options expire worthlessly and I keep premium and start over - if VXRT trades above $3.5 on the expiry date, my 100 shares will get called away and I will realize my max profit $19 ($1 value gain and $17 options premium) or potential 5.44% income yield in 7 days.
Break-even price: $3.49-$0.17= $3.32
Running Total 2 Trades since May 20, 2022
Options income: $18