Roll Forward and up 1 Covered Call on Pfizer (NYSE:PFE) - Potential income return +2.67% in 396 days

On May 5, 2021, we rolled forward and up 1 covered call on NYSE:PFE  stock expiring on December 17, 2021. For this trade, we got $40 (after commissions)

As we were buying PFE stock throughout the year 2020, our average buy price is: $37.87

On May 5, PFE was trading above $39 and we decided to roll forward for credit (by buying back our existing call option) not to miss a dividend (div ex-date was also in May 5th or 6th)

here is our trade setup:

  • BOT 1 PFE MAY 14 '21 37.5 Call Option 3.29 USD

  • SLD 1 PFE DEC 17 '21 38 Call Option 3.74 USD

what can happen next:

PFE is trading below our strike price of $38 at the expiry date (December 17, 2021), in this case, we keep the premium and sell more covered calls to lower our cost basis. 

In case PFE is trading above our strike price of $38 our 100 shares get called away at the strike price of $38 and we realize a minor gain of +$101.8 or +2.67% total income return in 396 days

Break-even: $36.00