August 15, 2023
Covered Call: Buy Ionq (IONQ) Stock and Sell the September 15 Call (exp. 9/15) for a net price of $13.65 or less.
Ionq (IONQ) is a quantum computing company whose stock has gotten a boost via the AI growth story. In fact, the stock is up 360% year to date.
The company reported earnings late last week that was well received by the Wall Street community. In reaction to the announcement, the stock traded marginally higher which is fairly impressive given the recent carnage in the growth sector.
Today IONQ stock is trading higher by 7%, and traders have bought calls across many time frames which is raising the price of options. Let’s sell that expensive volatility via a defensive covered call.
To execute this trade you need to:
Buy IONQ Stock
Sell to Open the September 15 Call
For example, you could buy the stock for 15.75, and sell the call for $2.10 (approximately)
The most you can lose on this trade is $1,365 per covered call executed should IONQ stock go to zero.
The breakeven on this trade is at 13.65.
The most you can make on this trade is $135 per covered call, or a yield of 9.89% in one month’s time should IONQ close above 15 on September expiration.
The risks I see in this trade are largely market/sector related. What I mean is should the AI story unwind, IONQ will likely fall. That risk is why I’ve chosen to sell an in-the-money call, so as to give us room to the downside.
| Position (Original) | IONQ September 15 Covered Call |
| Position Strategy | Covered Call |
| Opened Date | August 15, 2023 |
| Expiration | September 15, 2023 |
| Net Price | 13.43 |
| Strike | 15 |
