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BAC Covered Call

November 17, 2022
Covered Call: Buy Bank of America (BAC) Stock, and Sell the December 37 Call (exp. 12/16)

Ahead of the volatility smash next week for the Thanksgiving holiday (I will write more about this in the Monday morning Weekly Update), today I want to add another short volatility trade to the portfolio via leading financial Bank of America (BAC), which will replace our Macy’s (M) trade, that will likely expire for full profits tomorrow.

To execute this trade you need to:

Buy BAC Stock

Sell to Open December 37 Call

For every 100 shares of BAC stock you purchase, you can sell 1 call. For every 200 shares bought, you can sell 2 calls. And so on …

For example, you can buy BAC stock for 37.1, and sell the December 37 call for $1.20 (approximately).

The most you can make on this trade is $110, plus collect the $22 dividend, per covered call, should the stock close above 37 on December expiration.

The breakeven is at 35.68.

Position (Original)
BAC December 37 Covered Call
Position Strategy
Covered Call
Opened Date
November 17, 2022
Expiration
December 16, 2022
Net Price
35.85
Strike
37
Jacob Mintz is a professional options trader and editor of Cabot Options Trader. Using his proprietary options scans, Jacob creates and manages positions in equities based on unusual option activity and risk/reward.