AMC Covered Call

Next covered call trade expected to yield 24% APR

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AMC Covered Call

Shake the Money Tree portfolio continues to expand and enters into an AMC Covered Call strategy that is expected to yield 24%. With the recent AMC volatility, this was a great time to earn a potential double digit return.

Trade Details

On Friday May 28th, I was able to execute an AMC June 18, 2021 covered call for a net debit of $9.80, here are the trade details:

Buy 100 Shares of AMC at $33.96 per share

Sold a June 18 $10 Call Option for $24.16 per share

Less transaction fees of $0.55

So this was a net investment of $980.55. 

The max gain of this trade is $19.45 for a 3 week period, which might not seem huge but that is about 2.0%. Assuming I can complete this trade for 12 months, this comes out to be about a 24% annual percentage rate. Not too bad

As noted in my previous covered call write-up, AMC needs to stay above $10.00 at expiration on June 18. The strike price represents approximately a 70% buffer to the price of the trade. The $10 level also represents a fair floor for the stock based on the last few months of trading. With that, I feel pretty good about this investment.

Disclaimer

At the time of writing this blog post, the author is long shares of AMC via a covered call strategy. This post is purely for educational purposes and each investor should do their own due diligence.