free option strategy

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.

OPPORTUNITY

There is an attractive covered call trade in Fossil Group (FOSL). It is currently trading at $11.64.

CHARACTERISTICS

There is a 71.9% chance the stock will close above 10.00 on 08-18-2017, and you will earn your target return of $161.90. There is a 75.7% chance the stock will close above 9.67 on 08-18-2017, and you will earn a profit. There is a 0.1% chance the stock will close at or below 0.00 on 08-18-2017, and you will have a total loss of $4,833.15.

ENTRY PLAN

To enter this position you will sell 5 call options expiring on 08-18-2017 with a 10.00 strike price and buy 500 shares of stock for 11.64. This will require a net debit of $9.64. The commission for this trade will be $13.15.

DISCLAIMER

All information presented here is current as of 08/04/2017 12:50 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 FOSL to close above $9.67 August 18th, 2017 to earn a profit. The stock closed at $7.49. This strategy had a net debit of $9.64 on 500 shares. Each share had a negative value of $2.15 resulting in a loss of $1,075.