Roll Forward and down 1 Covered Call on Virgin Galactic Holdings (NYSE:SPCE) - Potential income return 8.77% in 42 days

On May 11, 2021, we rolled forward and down 1 call option on Virgin Galactic Holdings (NYSE:SPCE) with an expiry set on May 28. For this trade, we got a $40 premium (before commissions)

We have been in this trade since April 16, when we bought 107 shares of SPCE paying $23.14 per share

Virgin Galactic is an American spaceflight company within the Virgin Group. It is developing commercial spacecraft and aims to provide suborbital spaceflights to space tourists. Virgin Galactic's suborbital spacecrafts are air launched from beneath a carrier airplane known as White Knight Two.

As our previous strike price of $23 was not touched, we decided to roll forward and down the strike price for another two weeks.

Here is our trade setup:

  • SLD 1 SPCE May 28 '21 22.5 Call Option 0.40 USD

what can happen next:

SPCE is trading below our strike price of $22.5  at the expiry date (May 28, 2021), in this case, we keep the premium and sell more covered calls to lower our cost basis. 

In case SPCE is trading above our strike price of $22.5, our 100 shares get called away at the strike price of $22.5 and we realize our max gain $203 or 8.77% potential return of income in 42 days. 

Break-even: $20.66