On Monday, November 22, our fearless, intrepid investor sold 10 Novavax (NVAX) covered call contracts at a strike price of $210, with the expiry date on Friday, November 26. (26NOV21 210.00) (US markets were closed for Thanksgiving on Thursday, November 25.)
She got $5.41 per share ($5,410.00 in total) immediate premium income allowing $5.50 per share for growth. That hoped-for growth did take place. She earned $10,910.00 this past week in her “fun” portfolio. ($5,410.00 plus $5.50 times 1,000) She made that money in the week when US stock markets experienced their worst Black Friday losses ever! By precisely tracking the S&P 500, her core portfolios did just as badly as the US markets, of course.
So far this month, she earned $14,069.23 writing covered calls on NVAX each Monday, expiry date on Friday of the same week, far enough out-of-the-money to allow between $7.50 to $10.00 for growth. Her NVAX covered call earnings include a loss of $7,910.69 in the week ending on Friday, November 5.
Her winnings are entirely due to luck.
Remember that in the week ending on Friday, October 22, she lost $36,528.00 investing (if you can call it that) in the same manner.
Again, entirely due to luck, only, this time, bad!
This sort of outcome is annoyingly common.
What are her plans when the market opens today at 9:30 AM? What choices is she looking at?
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