October Expiration
Our covered call ideas for the October expiration cycle are on their way to yielding us another solid month of profits ranging from 7.88% to 17.41%. That being said, should the market sell off, HZNP and MOS are within range of not finishing over our strike price today, which is totally fine. Here is a breakdown of each:
Let’s start with Horizon Therapeutics (HZNP) which we have now traded successfully twice in the last several months. This most recent trade we bought the stock at 76.75 and sold the October 80 call for $4.
Today, with the stock trading at 80.75, if the stock closes ABOVE 80 we will walk away with our profit of $725 per covered call, or a yield of 9.96%. You do not need to adjust this position and come Monday we will not have a stock or option position in HZNP.
However, if the stock closes BELOW 80 today, you will not need to act on this position, and come Monday morning I will decide if we should sell a new call, or simply take our profits and sell the stock.
Penn National Gaming (PENN) worked out spectacularly for us as the stock rose dramatically shortly after we executed our covered call trade. In September we bought the stock at 55.3 and sold the October 60 call for $4.20.
With the stock trading at 70, we will walk away with our profit of $890 per covered call, or a yield of 17.41%. You do not need to adjust this position and come Monday we will not have a stock or option position in PENN.
Mosaic (MOS) has been choppy since we bought the stock at 18.10 and sold the October 19 call for $0.72. However, choppy is good in short volatility trades and with the stock trading at 19.30, if the stock closes ABOVE 19 we walk away with our profit of $162 per covered call, or a yield of 9.32%.
You do not need to adjust this position and come Monday we will not have a stock or option position in MOS.
However, if the stock closes BELOW 19 today, you will not need to act on this position, and come Monday morning I will decide if we should sell a new call, or simply take our profits and sell the stock.
Our “easiest” trade this month was Pinterest (PINS) as the stock took off in the days after we executed our call. To refresh, we bought the stock at 38.5 and sold the October 39 call for $2.35.
With the stock trading at 45, we will walk away with our profit of $285 per covered call, or a yield of 7.88%. You do not need to adjust this position and come Monday we will not have a stock or option position in PINS.