When the market opened on Monday, October 18, our fearless, intrepid investor sold 12 Novavax (NVAX) covered call contracts at the $170.00 strike price, expiry date, Friday, October 22 (C 22OCT21 170.00), allowing $5.00 per share for growth, if there was going to be any.
At this time, her total NVAX investment had a value of $198,000.00 ($165.00 times 1,200).
When her order was filled, she received $2.8550 per share immediate premium income for a total of $3,426.00 ($2.8550 times 1,200).
How great is that? It works out to 1.73% for the week! ($3,426.00 divided by $198,000.00 times 100). Multiply that by 52 to annualize it. Staggering, isn’t it?
Monday Morning Program members don’t count on luck for results in their core portfolios. What our fearless, intrepid investor is doing here requires luck.
Last week, she was not lucky. By the end of the week, NVAX dropped to $134.56, giving her $30.44 ($165.00 minus $134.56) per share loss.
At this time, her total NVAX investment had dropped to a value of $161,472.00 ($134.56 times 1,200).
Her loss for the week was $36,528.00 ($198,000.00 minus $161,472.00). When she was in dental practice, she rarely earned a quarter of that amount in a good week.
A similar situation happened last week. NVAX market price growth took place for a few days, but the share price dropped below strike price by the end of the week resulting in an overall loss.
In a recent post we stated is that mistakes are practice shots. To succeed, make more mistakes. Forget the mistakes, remember the lessons.
So, why the loss? That is, what was her mistake? Any redeeming features? What will she do when the market opens at 9:30 this morning?
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