Sunday, January 24, 2016

Another Covered Call

    On January 15, I had 3 covered calls expire.   These covered calls were in TD Bank, Royal Bank, and Restaurant Brands International.

     The option premiums for the strike price I am looking are low for TD and RY. I looked out for several months.  The price of Restaurants Brands International is very volatile.  On January 21, I wrote a covered call for a premium of  $0.50 per contract. Since a contract represents a hundred shares, that is a premium of $50.00 excluding commissions.


Option Premium including commissions = $39.05
Days to expiration = 29

Return =  $39.05/$5200
            = 0.751%

This represents a return of 0.75% for 29 days. Currently, my bank account pays 0.80% per year interest and I made 0.75% return in less than a month.  That is, if the stock is not called away prior to on the option expiration date. 

Annualized Return = .751%/29*365
                               = 9.452%

Disclosure : Long QSR , RY, TD

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

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