Last Monday, June 13, our fearless, intrepid investor sold 23 covered call contracts on Novavax (NVAX) at a strike price of $40, expiry date Friday of the same week, June 17. (C 17JUN22 40.00) NVAX was trading at $36.50.
She received $US2,309.03 in premium income allowing $3.50 per share growth if there was to be any.
That $US2,309.03 was immediate money in the bank regardless of what NVAX did over the course of the week.
For several weeks now, NVAX has dropped by more than the premium income she received for an overall loss in her “fun” portfolio.
As we frequently state, with the habits of the Monday Morning Program, luck hardly matters. Writing covered calls does require luck. Last week, she was lucky! NVAX rose to $40.24 and she collected $US8,050.00 ($US3.50 times 2,300) from NVAX growth in addition to the $US2,309.03 in premium income for a total of $US10,359.03 ($US8,050.00 plus $US2,309.03).
When she was in practice, she would have considered that to be an exceptionally good week’s income. Writing the 23 covered call contract on NVAX, she earned that before breakfast last Monday morning, June 13.
Of course, she was assigned having written the 23 covered call contract at a strike price of $US.40.00.
So, what are her plans for today when the market opens at 9:30 AM?
What is the worst that can happen?
What is the best that can happen?
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