Rolled Forward and Up PFE Covered Call +3.02% potential income return in 108 days
On November 29, 2021, I decided to roll up and forward 1 covered call on PFE stock, a position I originally established at the start of November by investing $44.95.
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.
Pfizer Inc. is an American multinational pharmaceutical and biotechnology corporation headquartered on 42nd Street in Manhattan, New York City. The company was established in 1849 in New York by two German immigrants, Charles Pfizer and his cousin Charles F. Erhart.
here is the trade setup:
BOT 1 PFE DEC 10 '21 45 Call Option 9.43 USD
SLD 1 PFE FEB 18 '22 47 Call Option 8.01 USD
Here I bought back December 10 $45 strike price option paying $943 and sold a new option with strike price $2 higher, for what I get $801.
In total, I paid a debit of $142, but as I managed to increase my strike price by $2 or $200, in theory, I made $58
What happens next?
On the expiry date, February 18, 2022, PFE is trading under $47 per share - options expire worthlessly and I keep premium or as there were no actual premium I lost debit I paid - if PFE trades above $47 on the expiry date, my 100 shares will get called away and I realize my max profit $136 ($5+$200-$147+$78) or potential 3.02% yield in 108 days.
Break-even price: $44.95+$0.69= $45.64