Tomorrow is the expiration of June options and we are going to close five positions for full profits ranging from 9.75% to 17.64%. Meanwhile, we have one position that will be interesting to see where the stock closes tomorrow.
Let’s start with our Chegg (CHGG) covered call, which is our most interesting position. Originally, we bought the stock for 61.5 and sold the June 65 call for $2.50. Today the stock is trading at 64. My plan is to simply let this position play itself out. If CHGG closes above 65 tomorrow we will walk away with a nice profit. If CHGG closes below 65 tomorrow the June 65 call will expire worthless and we will sell a new call next week.
This is the perfect example of why selling calls can be such a great trading weapon—CHGG has mostly been range bound, but we are making money by selling calls.
Moving on to Lattice Semiconductor (LSCC), last month we bought stock at 21.8 and sold the June 22.5 call for $1.30. With the stock trading at 27, we will walk away with our profit of $200 per covered call, or a yield of 9.75%. You do not need to adjust this position and come Monday we will not have a stock or option position in LSCC.
Next up is Snap (SNAP). Last month we bought stock at 16.5 and sold the June 18 call for $0.75. With the stock trading at 21.5, we will walk away with our profit of $225 per covered call, or a yield of 14.28%. You do not need to adjust this position and come Monday we will not have a stock or option position in SNAP.
CrowdStrike (CRWD) is the next stock on our list. We bought the stock at 64.25 and sold the June 70 call for $4.20. With the stock trading at 98, we will walk away with our profit of $995 per covered call, or a yield of 16.5%. You do not need to adjust this position and come Monday we will not have a stock or option position in CRWD.
Chewy (CHWY) took a bit of time to get going but worked out spectacularly in the end. Originally, we bought the stock at 42.65, sold the May 43 call for $3.20, and a month later that call expired worthless. Then we sold the June 43 call for $3. Today, with the stock trading at 49, we will walk away with our profit of $655 per covered call, or a yield of 16.6%. You do not need to adjust this position and come Monday we will not have a stock or option position in CHWY.
What a roller coaster it was for our Etsy (ETSY) position as we rode this stock through the market crash in March and now the stock is trading near an all-time high. Originally, we bought the stock for 56.7 and sold the June 60 Call for $5.70. With the stock trading at 86, we will walk away with our profit of $900 per covered call, or a yield of 17.64%. You do not need to adjust this position and come Monday we will not have a stock or option position in ETSY.
Similarly, Nuance Communications (NUAN) was not easy as the COVID-19 situation rocked our position initially, but in the end it worked out “okay.” Our initial trade was to buy the stock at 22.5 and sell the April 23 call for $0.70. That call expired worthless and then we sold the June 21 call for $0.55.
With the stock trading at 23, we will walk away with a loss of $25 per covered call. You do not need to adjust this position and come Monday we will not have a stock or option position in NUAN.
The only real losing position in the group is Morgan Stanley (MS). While we sold several rounds of calls we are going to take a loss on this position.
Originally, we bought MS stock for 55.5 and sold the March 57.5 call for $0.85. Then COVID rocked the market and especially financials. We rode out this weakness and sold the May 44 call for $0.65, and then the June 44 call for $0.67. And while these premiums helped offset the weakness and we could continue to sell more calls, I think there are much better opportunities and thus we will walk away from MS. You do not need to adjust this position and come Monday we will not have a stock or option position in MS.