Rolled Forward and Up Call Option with Ethereum - Potential income 2.1% in 55 days
On March 12, 2023, I rolled forward 1 covered call on Ethereum crypto coin, a position I originally established just a few days ago, see: Sold Call Options on crypto Ethereum - potential income of 1.85% in 7 days
I rolled because my strike price of $1,500 was touched, and not willing to exit the trade yet. When placed this trade I didn't expect such a sharp Ethereum price bounce, Though the bounce didn't come as surprise.
Also, I should note - I actually don't have 1 ETH, just 0.6962 ETH, which equals $973.92 at the time of writing.
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 ETH MAR 31 '23 1500 Call Option 0.0625 ETH
SLD 1 ETH APR 28 '23 1600 Call Option 0.06 ETH
Here I bought back March 31, 2023 expiry call option paying 0.0625 ETH, and sold a new call option with expiry on April 28, 2023, receiving 0.06 ETH (before commissions)
What happens next?
On the expiry date, April 28, 2023, ETH is trading under $1,600 per coin - the call option expires worthlessly and I keep the premium and start over - if ETH trades above $1,600 on the expiry date, I pay the difference in crypto.
Say ETH trades $1,850 on expiry, I need to pay the difference between the spot price and strike price, which is $250, or converted it back to ETH which would equal 0.156 ETH.
I would be left with 0.69+0.0185-0.0345+0.0395-0.0625+0.06-0.156= 0.555 ETH
Converted back to USD = $1,026.75
Despite would loss on crypto itself I would gain in dollar terms.
Nevertheless, I will try to roll up and away for credit if challenged.
My plan is to grow this Ethereum portfolio to at least 1 ETH or $2,000 in a foreseeable future (May / June 2023) and I'm seriously considering getting there with the help of writing call options + depositing some small bits into the crypto once in a week using the so-called dollar cost averaging.
Interested to learn more about trading crypto options? I'm putting together an online course Crypto Options Trading Strategies, feel free to pre-enroll!