Roll Forward and down 1 Covered Call on INTC - Potential income return 7.86% in 52 days

On April 23, 2021, we rolled forward and down 1 almost covered call on INTC stock expiring on April 30, 2021. For this trade, we got a $32 premium (before commissions).

Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California, in Silicon Valley.

We sold a covered call, despite we are holding just 62 shares with this stock. In case our strike price will get touched, we will have to buy the missing 38 shares in the open market (~ $2,450). There are two reasons why we sold a covered, before reaching 100 shares:

  • it helped to increase our buying power

  • we feel confident enough to take this little risk

As we have been buying INTC using dollar-cost averaging our average buy price is: $57.28

here is our trade setup:

  • SLD 1 INTC APR 30 '21 60.5 Call Option 0.32 USD

what can happen next:

INTC is trading below our strike price of $60.5 at the expiry date (April 30, 2021), in such case, we keep the premium and sell more covered calls to lower our cost basis. 

In case INTC is trading above our strike price of $60.5, our 100 shares get called away at the strike price of $60.5 and we realize our max gain of $450.6 or 7.86% potential total income return in 52 days

Break-even: $56.00