Covered Call – Free Trade Idea
Every Friday we give you a free options trade idea identified by Option Party. Today, we’re focusing on the classic covered call.
There is an attractive covered call trade in Pandora (P). It is currently trading at $9.28.
There is a 71.3% chance the stock will close above 8.00 on 06-16-2017, and you will earn your target return of $173.25. There is a 75.5% chance the stock will close above 7.70 on 06-16-2017, and you will earn a profit. There is a 0.1% chance the stock will close at or below 0.00 on 06-16-2017, and you will have a total loss of $4,621.80.
To enter this position you will sell 6 call options expiring on 06-16-2017 with a 8.00 strike price and buy 600 shares of stock for 9.29. This will require a net debit of $7.68. The commission for this trade will be $13.80.
All information presented here is current as of 05/19/2017 3:05 pm EST. All trading involves risk. Free trades ideas are presented for illustrative purposes only and are not to be construed as financial advice.
How Did We Do? The Results…
This trade employed a Covered Call strategy that needed P to close above $8.00 on June 16, 2017 to earn the targeted return. P closed at $8..75 which resulted in a return of $173.25.