February Expiration - SPLK, FND, FTNT
Today three of our covered calls will expire. The great news, all three trades will be closed for nice profits!
I am going to let two positions expire for full profit, and manually close one, as I am starting to get a touch wary of the markets action. A breakdown of our profits and instructions on how we will manage these positions are below:
First is Splunk (SPLK) which we bought stock at 149.25 and Sold the February 155 Call for $6.30. Today the stock is well above our short strike price of 155 which means we will have made $575 per 100 shares bought on the stock (149.25 rising to 155) and collected the $630 per call sold. Net/net this is a profit of $1,205 per 1 covered call, or a yield of 8.42% in just over one month’s time!
With earnings coming early in March and technology stocks coming under pressure, I am going to lower our risk and simply let this position expire. You do NOT need to do anything with the SPLK stock or option position and come Monday you will not own a SPLK position.
Moving on to Floor & Decor (FND) in which we bought stock at 50.35 and sold the February 52.5 Call for $2.50. Today, following earnings the stock is above our short strike of 52.5 which means we will have made $2.15 per 100 shares bought on the stock (50.35 rising to 52.5) and collected the $250 per call sold. Net/net this is a profit of $465 per 1 covered call, or a yield of 9.71% in just over one month’s time!
I am simply going to let this position expire, and you do NOT need to do anything with the FND stock or option position and come Monday you will not have a FND position.
Lastly, we have Fortinet (FTNT) which will require a bit of attention today. To recap, we bought stock at 116.75 and sold the February 120 Call for $4. Today, with the stock trading at 115 we will have lost $175 per 100 shares bought and the call that we sold for $4 is going to expire worthless. Net/net this is a profit of $225 per 1 covered call, or a yield of 2% in just over one month’s time.
This is how we will manage closing this position:
First I am going to Buy to Close the FTNT February 120 call for $0.05.
As soon as that order is filled, I am going to Sell my FTNT stock position.
This will leave us without a stock or option position.
This was a very nice month for our covered calls as we collected yields of 8.42%, 9.71% and 2%. While every trade will not be as successful as these, what we can see from these trades is if you find the best stocks, and sell covered calls very quickly you can accumulate big yields month after month.
SPLK Bought 149.25 Sold February 155 Call for $6.30
FND Bought stock at 50.35. Sold February 52.5 Call for $2.50
FTNT Bought stock at 116.75. Sold February 120 Call for $4