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Rolling 10 covered call options on Solana coin - potential income - 4.5% in 18 Days
On October 14, 2022, I rolled down and forward 10 covered call options on Solana crypto coin. A position I originally established on October 3, 2022, investing $322 in 10 SOl coins
As this contract expired, I sold 10 new contracts with lower strike prices, and the expiry is set for next Friday, October 21, 2022. For this trade, I got a premium of 0.15 / SOL / $4.70 at the time of writing
Selling crypto options is pretty much the same as selling stock options, except they are settled in crypto, require less capital, are settled European style (cannot be assigned before the expiry), and can go totally wrong.
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:
SOL-21OCT22-33-C sell 10 0.015
For this trade, I got a premium of 0.15 SOL (after commissions) or about 1.5% potential income return in 7 days, if options expire worthlessly.
What happens next?
On the expiry date, October 21, 2022, SOL is trading under $33 per coin - options expire worthlessly and I keep the premium and start over - if SOL trades above $33 on the expiry date, I pay the difference in crypto. Say SOL trades $34 on the expiry date, I will need to pay the difference between the spot price and strike price, which is $1, or if converted back to SOL would equal 0.02941 SOL.
I would be left with 10+0.12+0.18+0.15-(0.02941*10) = 10.1559 SOL
As my initial investment was worth $323.82, my new SOL worth would be $345.3 now. In dollar terms, I would make $21.48 or about 6.63% in 18 days.
Break even: 323.82/(10+0.12+0.18+0.15)= $30.98
Interested to learn more? I'm offering paid - online live course Selling Covered Call Options on Crypto (BTC/ETH/SOL)