On November 01, 2021, I rolled up and forward 1 covered call with PFE
Originally I entered this trade some three weeks ago, see: Sold 1 Call Option on PFE – 0.08% potential income return in 4 days
I decided to roll up this call option because it was in the money, had a very positive earnings report and dividend ex-date approached, must probably be calling away my shares.
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
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here is the trade setup:
BOT 1 PFE NOV 05 '21 44 Call Option 0.93 USD
SLD 1 PFE DEC 10'21 45 Call Option 1.03USD
Here I bought back the $44 call option with this Friday expiry paying $94 and sold a new call option with a higher strike price but with expiry in December. For this trade, I got $103 (before commissions).
What happens next?
On the expiry date, December 10, 2021, PFE is trading under $45 per share - options expire worthlessly and I keep premium - if PFE trades above $45 I'm troubled as I need to deliver shares I don’t have, to avoid such scenario I will roll up strike prices
Break-even price: $45+$0.77= $45.77