HOLD THE STOCK ? OR TAKE THE CAPITAL NOW ????
Here is a example how we can take the capital gain early, Lets go through it step by step
The positions statement
Strike Price is $77.50
Stock Price is $83.48
Difference $5.98
$6.20 (current pay back) – $1.80 (original income) = $4.40 (total to pay back)
Option A – Hold
We leave the position as is
$77.50 (Covered Call) – $75.20 (break even) = $2.30
Divide $2.30 into $77 (original purchase price) = 3% till expiry
Option B – Sell
take capital gain now
$5.98 (strike – stock price) – $4.40 (current pay back – original income) = $1.58
Divide $1.58 into $77 (original purchase price) = 2% now
So we now have a choice wait 11 days for a extra 1% if the stock stays above the break even or close out now for 2%
to find out more go to http://www.sellingcoveredcallsstrategy.com
