Discover more from Covered Calls with Reinis Fischer
Rolled Forward and Down 1 Put option on MO – 3.62% potential income return in 218 days (6.04% annualized)
On September 19th, 2023, I rolled forward and down 1 put option on Altria Group Inc stock (NYSE:MO), a position I originally established on June 15, 2023
I rolled because my strike price of $44 was in the money and the expiry date (September 22) was approaching. I didn’t want to take an assignment risk before the expiry and decided to roll down this position, while still squeezing out some extra juice (premium)
Altria Group, Inc. is an American corporation and one of the world's largest producers and marketers of tobacco, cigarettes, and related products. It operates worldwide and is headquartered in Henrico County, Virginia, just outside the city of Richmond.
From the premium received, I bought an additional 1 share of MO stock itself for our long-term stock portfolio. MO also is a dividend payer, this little addition will boost the portfolio by $3.19 yearly. Amazing!
We are now holding 4 shares with MO in our stock portfolio, 96 to go before will start selling covered calls to generate extra income.
This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.
here is the trade setup:
BOT 1 MO SEP 22'23 44 PUT 0.93
SLD 1 MO JAN 19'24 42.5 PUT 1.39
What happens next?
On the expiry date, January 19, 2024, MO is trading above $42.5 per share - options expire worthlessly and I keep premium - if MO trades under $42.5 on the expiry date, I risk getting assigned 100 shares and will have to buy them paying $4,250
As I already have collected a premium of $1.54 per share, my break-even price for this trade is $42.5-$1.54= $40.96
In case of an assignment, I will turn this trade into a wheel strategy and will start selling covered calls.
Anyhow, if troubled with the strike price near the expiry, I will try to roll it forward and down, preferably for credit, before actually taking the stock assignment.
In total: 12 trades since June 15, 2023
Options premium: $155