Wednesday, July 6, 2016

Option Trade - Covered Call

       The markets have dropped during the early morning today over rising fears of the fallout from Brexit.   Britain voted in favor of exiting the European Union recently.  Investors and traders have to consider how this will affect businesses, international trade, commodities, and economies around the world.

       On July 6, I wrote a covered call in TD Bank with a strike price of $56.50 and collected a premium of $12.05 after commissions.  This is not a large sum but is income none the less. The amount of days to expiration is 23.  Sure, I could of collected a larger premium if the stock price rose after falling.

       The stock goes ex-dividend July 6  and a dividend payment date of July 31.  Since I already own the stock, I receive this dividend.  The annual dividend rate is $2.20 per share.  So since I own 100 shares of stock I will receive a dividend payment of $55.00.


Strike Price:  $56.50
Days to Expiration = 23
Premium Received = $12.05 after commissions

Return for 23 days = $12.05/$5600
                               =  0.215%

Return Annualized = ($12.05/$5600) *(365/23)
                                = 3.415%

An annualized return of 3.415% is definitely higher than a interest received on a high interest savings account.

Note: For my broker, there is an option assignment fee for an option to be assigned or exercised.  This option assignment fee is $24.95

Disclosure: Long 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.


  1. Hey income is income. Congrats on generating some more out of your portfolio.
    That really sucks that there is an options assignment fee. Which broker do you use?


    1. R2R,

      Thanks for dropping by. My brokerage is Questrade. They use to have an option assignment/exercise fee of $12.95 but changed it to $24.95.

  2. Option trading is not suitable for every trader. Traders those are having high risk bearing capacity can perform option trading by using option trading tips of Epic Research.