Established New Covered Call on NYSE:GOLD
On February 08, 2022, I bought 100 shares NYSE: GOLD stock paying $19.69 per share and simultaneously sold 1 covered call on them with a strike price of $20 and expiry this Friday. Credit received $13 (before commissions)
NYSE:GOLD - Barrick Gold Corporation is a mining company that produces gold and copper with 16 operating sites in 13 countries. It is headquartered in Toronto, Ontario, Canada.
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I have been trading calls and put options with great success on NYSE: GOLD stock for about a year. Today, when looking at 50 and 200-day Moving Averages in my charts I noticed NYSE:GOLD is a buy and decided to make this little trade setup for extra few dollars.
here is the trade setup:
BOT 100 GOLD Stock 19.69 USD
SLD 1 GOLD FEB 11 '22 20 Call Option 0.13 USD
I bought 100 shares at $19.69 apiece, in total paying $1,969 and sold 1 covered call with this Friday’s expiry, for what I received a premium of $13 (before commissions)
What happens next?
On the expiry date, February 11, 2022, NYSE: GOLD is trading under $20 per share - options expire worthlessly and I keep premium - if GOLD trades above $20 on the expiry date, my 100 shares will get called away and I realize my max profit $41 ($10+$31) or potential 2.08% income yield in 3 days.
Break-even price: $19.69-0.1= $19.59
I seriously doubt the stock will actually get called away this week, but anything can happen, and if so I will be happy, if not I will keep selling weekly / bi-weekly call options while collecting the small but valuable dividend.