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Rolled Forward Dow Inc Covered Call +4.82% potential income return in 21 days
On October 22, 2021, I rolled forward 1 covered call on Dow inc. stock, a position I originally established at the start of October by investing $5,850. See Established New Covered Call on Dow Inc.
here is the trade setup:
BOT 1 DOW OCT 22 '21 60 Call Option 0.12 USD
SLD 1 DOW OCT 29 '21 60 Call Option 0.65 USD
Here I bought back October 22 expiry call option with a strike price set of $60, by paying $12 and sold next week’s expiry call option from whom I got a premium of $65
What happens next?
On the expiry date, October 22, 2022, DOW is trading under $60 per share - options expire worthlessly and I keep premium - if DOW trades above $60 on the expiry date, my 100 shares will get called away and I realize my max profit $$282 ($150+$132) or potential 4.82% yield in 21 days.
Break-even price: $58.5-$1.32= $57.18