Pfizer (PFE)
Since we introduced our PFE position back in early June 2022, we’ve managed to bring in 27.7% worth of premium and capital gains by using our simple income wheel approach. Comparatively, the stock is down roughly 25% over the same time frame.
Today, I want to hopefully build upon those returns, so I want sell more call premium.
*As a reminder, we are not selling naked calls, so you need to have at least 100 shares if you wish to enter a new position in PFE. For those of you who are new to Income Trader and wish to follow along with PFE, buying at least 100 shares of PFE for every call contract you wish to sell is required as we are in the covered call phase of the Income Wheel strategy for PFE.
PFE is currently trading for 26.90.
Here is the trade:
Sell to Open PFE January 26, 2024, 28 (covered) call for $0.46. (Adjust accordingly, prices may vary from time of alert).
Delta of short call: 0.33
Probability of Profit: 69.96%
Probability of Touch: 62.16%
Total net credit: $0.46
Max return (cash-secured): 1.7%
Risk Management
We use PFE as part of our Income Wheel Portfolio, so if PFE closes above our call strike at expiration, our shares will be called away and, in most cases, we will reap the capital benefits of the stock increase, plus the premium acquired. Until that point, we will repeatedly sell calls on PFE.
DraftKings (DKNG)
As part of the Income Wheel approach, we allowed our DraftKings (DKNG) puts to expire in the money at expiration last week. As a result, we were issued shares at our chosen put strike of 36.
Today, as our Income Wheel strategy states, we are going to sell calls against our newly issued shares in DKNG.
We are not selling naked calls, so you need to have at least 100 shares if you wish to enter a new position in DKNG. For those of you that are new to Income Trader and wish to follow along with DKNG, buying at least 100 shares of DKNG for every call contract you wish to sell is required as we are in the covered call phase of the Income Wheel strategy for DKNG.
DKNG is currently trading for 35.31.
Here is the trade:
Sell to Open DKNG January 19, 2024, 38 (covered) call for $0.83 (adjust accordingly, prices may vary from time of alert).
Delta of short call: 0.31
Probability of Profit: 72.91%
Probability of Touch: 54.98%
Total net credit: $0.83
Max return (cash-secured): 2.3%
Risk Management
We use DKNG as part of our Income Wheel Portfolio, so if DKNG closes above our call strike at expiration, our shares will be called away and, in most cases, we will reap the capital benefits of the stock increase, plus the premium acquired. Until that point, we will repeatedly sell calls on DKNG.
As always, if you have any questions, please feel free to email me at andy@cabotwealth.com.