On 29MAR2021 I wrote a covered call contract (strike: $260; expiration: 23APR2021) on our Square (SQ) shares when they closed at $207.18. Last week SQ shares closed as high as $273.23 – nearly 32% higher than when we initiated the trade. I actually bought 25 shares for roughly $255 in a tax-advantaged account to hedge against this contract expiring in the money.
We’re now underwater on the new shares as SQ shares fell about 10% from last week’s high and the call option contract was closed on an aggressive limit order when SQ closed around $245 today. We netted just $23.62 on the contract that was active for 22 days but I sold another contract (strike: $270; expiration: 30APR2021) for $180. For another week of upside exposure we added $80 worth of option premium and $1,000 in liquidation value. If next week’s market presents a similarly attractive opportunity to roll up and out our new covered-call contract I will take it, too.
Source: MarketWatch.com