Now the picture above is a little deceptive as the 1st line was accidentally a 30 day option, gave me $10 in premium, but won’t expire till Friday, May 15th. So the negative -$177 means I paid $187 for my 100 shares of GEVO. It crossed $2.02 last friday, but it’s down to $1.66 right now. Selling it at $1.67 would break me even on my initial money. Anything above that comes out on profit since I got the $10 premium.

My Options choices are covered in very little research as I was highly focused on testing this type of income generation.

I currently have SNAP at 1000 shares, Ford at 100, and GEVO at 100. Cummulative Principal out of pocket: $177 + $6,210 + $1,180 = $7,567. Week 1 I had 100 shares of RIOT that were called away giving me a total profit of $84.94 + the $10 from GEVO. Week 1 total: $95 profit.

Week 2 I wanted to try more contracts than 1, so I split the RIOT money into SNAP. Shares were called away at $6.00 on a cost basis of $5.91. (4 contracts). I also had 100 shares of KOPN that week. Premiums ran $96 + $18. After all SNAP shares were called away profit was $148.86.

Week 3, I felt that SNAP was heading to the moon. Notice that word, FELT. This is emotional now, the high of making the amount of money that would clear my debts in six months and provide financial freedom, but here’s the catch, my research was minimal. SNAP had an earnings call, some places said it might hit $10 a share this year. I bought back in at $6.21, but now I added 600 shares to make the SNAP position 1000 shares (10 contracts). The KOPN didn’t get called so it was available to do another Covered Call this week.

KOPN $4.26 purchase price, $4.50 strike, $0.25 premium. $25 in premium – $49 in profit if called away. SNAP on the other hand. $6.50 strike price, $0.38 and $0.32 premiums. $344 in premiums. The issue, the earnings call was down. The price has been dropping. Shares didn’t get called away. Week 3 profits- $442.98. KOPN was called away.

This leads me to right now, week 4 of learning Covered Calls. Total profits before week 4 $686.84. $206 set aside for Taxes. $480 in spendable profits. $112.14 was used to buy back the called away SNAP at a higher price. Leaving $367 for buying the goal stock of Ford.

This week I have 10 contracts of SNAP with a cost basis of $6.21 (Current price is $5.59) I would actually lose $200 if I sold the SNAP right now. I also got up to 1 contract of Ford, price $11.80. Ford is supposed to be one of the best beginner stocks for covered calls, reliable with small swings up and down. As it had been sitting around $12 all morning I went with the $12.50 strike with a $0.03 premium. SNAP is at a $6.50 strike also at a $0.03 premium. Premiums this week $33. It is highly unlikely that these will execute, but if for some reason they did $393 in profit.

Here’s the breakdown of what I’ve learned so far. Premiums are great, but you can’t just focus on them and the weekly expiration. A stock should be held for a reason, you think it will drop, you think it will rise, or you are happy to own it long term. If you can find research to back up any of those three with non-emotional investing then you’ll be able to succeed with Covered Calls.

My goal is this, I want to reach 5 contracts with 3 stocks that have weekly options. I want to study them and focus on understanding how to pick better and when to exit a position. I want the profits of those 3 stocks to buy more of themselves until each one has 10 contracts before I expand. $480 is a long distance from $33 and there lies the rub.

~~Miniwing~~
Investor, Learner, Stoic