Rolled Forward and up UWMC Covered Call -9.17% potential income loss in 191 days
On February 18, 2022, I rolled forward 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
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.
This week UWMC stock recovered a bit and reached our strike price of 4.5 and it was agreed to roll up and forward this trade
here is the trade setup:
BOT 1 UWMC NYSE Feb18'22 4.5 CALL 0.30 USD
SLD 1 UWMC NYSE Apr14'22 5 CALL 0.27 USD
here I bought back today’s expiry 4.5 call and sold the new, April 14, 2022 expiry call with a higher $5 strike price call option. In total paying $3 (before commissions)
What happens next?
On the expiry date, April 14, 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 $6.26 or potential income loss of -9.17% in 191 days.
Break-even price: $6.82-$0.93= $5.89
Let’s see will I be able to recover this trade.