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Rolled Forward and down UWMC Covered Call +0.43% potential income return in 115 days
On January 18, 2022, I rolled forward and down 1 covered call on UWMC stock, a position I originally established at the start of October 2021 by investing $682, see: Established New Covered Call on UWMC; Potential Income return 3.9% in 7 days
I rolled down because the stock has dropped significantly under my current strike price. Looking to protect me in case of a further downturn. Might be troubled is stock will quickly rebounce.
United Wholesale Mortgage (NYSE: UWMC) is the wholesale mortgage lender
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:
SLD 1 UWMC JAN 28 '22 6 Call Option 0.10 USD
here I sold next Friday’s (January 28, 2022) expiry call option receiving $10 (before commissions)
What happens next?
On the expiry date, January 28, 2022, UWMC is trading under $6 per share - options expire worthlessly and I keep premium - if UWMC trades above $6 on the expiry date, my 100 shares will get called away and I realize my max profit $11 or potential income return 0.43% yield in 115 days.
Break-even price: $6.82-$0.85= $5.97
I prefer selling options on stable dividend stocks, in that manner collecting both dividend and option premium. Let’s hope - UWMC is stable enough.