Roll Forward and Up 1 Covered Call on Coca-Cola stock (NYSE:KO) - Potential income return 8.27% in 82 days

On May 3, 2021, we rolled forward and rolled up 1 covered call on the Coca-Cola stock (NYSE: KO) stock expiring on June 11, 2021. The aftermath of this trade: +$8 (after commissions)

As we have been buying KO using dollar-cost averaging our average buy price is: $51.11

With the KO price hovering around $54.5, we decided to roll up our $54.5 call option, not to risk early assignment

here is our trade setup:

  • BOT 1 KO MAY 21 '21 54.5 Call Option 0.71 USD

  • SLD 1 KO JUNE 11 '21 55 Call Option 0.84 USD

we decided to buy back 54.5 strike call, and sell a new, higher 55 strike with expiry on June 11, 2021. The aftermath of this trade +$8

what can happen next:

KO is trading below our strike price of $55 at the expiry date (June 11, 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 $55, our 100 shares get called away at the strike price of $55 and we realize our max gain of $423 or 8.27% potential total income return in 82 days

Break-even: $50.77