Roll Forward and Up 1 Covered Call on Coca-Cola stock (NYSE:KO) - Potential income return 11.43% in 243 days

On June 4, 2021, we rolled forward and rolled up 1 covered call on the Coca-Cola stock (NYSE: KO) stock with a new expiry date on November 19, 2021. The aftermath of this trade: +$30 (after commissions)

As we have been buying KO using dollar-cost averaging our average buy price is: $51.87

With the KO price hovering above $56 we decided to roll up our $55 call option, not to risk early assignment

here is our trade setup:

  • BOT 1 KO JUN 11 '21 55 Call Option 1.53 USD

  • SLD 1 KO NOV 19 '21 57.5 Call Option 1.88USD

we decided to buy back $55 strike call, and sell a new, higher $57.5 strike with expiry on November 19, 2021. The aftermath of this trade +$30

what can happen next:

KO is trading below our strike price of $57.5 at the expiry date (November 19, 2021), in such case, we keep the premium and sell more covered calls to lower our cost basis. 

In case KO is trading above our strike price of $57.5, our 100 shares get called away at the strike price of $57.5 and we realize our max gain of $593 or 11.43% potential total income return in 243 days

Break-even: $51.57