Covered Call Trade: Here’s I trade that looks interesting to me. I might just put this on in my personal account. This will not be an OptionGenius trade because there is too much risk, but it is something I would consider for my personal account.
I’ve been thinking about getting into F, Ford. It seems they are in the clear in terms of not going into bankruptcy. And with Chrysler already in Bankruptcy and GM going that way soon, there is going to be only 1 US car manufacturer left. That means those that will only buy American don’t have any option other than buying a Ford.
Ford also has large short interest so any good news will cause a short squeeze shooting the price up. At today’s price I would not mind buying some F and holding on to it long term. And of course selling calls against it every month for income.
Covered call strategy
So the trade is to do a Covered Call on F using the June 5 Strike Call. I just got filled and it cost me $4.62 per share. If F is above $5 at expiration I will get called ( my stock will be sold for me at $5 a share) and have a profit of 38 cents per share. That would be a 8.2% gain in 35 days.
If F is below $5 on expiration then I keep the stock and write more calls against it. At this point I am ok with owning F for a while.
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