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Rolled Forward and down UWMC Covered Call -13.23% potential income loss in 122 days
On January 28, 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 if a stock will quickly rebound.
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 FEB 04 '22 5 Call Option 0.12 USD
here I sold next Friday’s (February 04, 2022) expiry call option receiving $12 (before commissions)
What happens next?
On the expiry date, February 04, 2022, UWMC is trading under $5 per share - options expire worthlessly and I keep premium - if UWMC trades above $5 on the expiry date, my 100 shares will get called away and I realize a loss of $90 or potential income loss of 13.23% in 122 days.
Break-even price: $6.82-$0.85= $5.86
Let’s hope the January stock Selloff is over and next week I will have a chance to roll up and forward this position.