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Wednesday, September 15, 2021
Covered Call Strategy For Long Stock Portfolios
*Trading in financial market carries risk and can result in loss of capital.
*This performance is only observed with historical backtests and not traded by the company.
The product and investment ideas do not consider the risk profile and financial position of the recipient and may not be suitable for everyone. Trading in financial markets and use of margin involves a significant risk of loss, which can exceed deposits. Please read the complete disclaimer carefully.
Let’s take the example of Advanced Micro Devices (AMD) illustrated in the table below:
Make additional coupon on your long portfolio
|Covered Call Strategy|
|$115 Strike Call Option expiring on 15 Oct 2021||$2.00|
Buy Stock @ $106
Sell $115 Strike Call Option @ $2
Scenarios on 15 Oct, 2021
|Stock Price||Covered Call||Only Stock Buy|
Covered Call Payoff Chart
- All prices above are indicative and can change based on market movements.
- The Payoff table scenarios are post expiry date, P/L before the expiry can vary as per the market movement
Risks and Assumptions for Back-tested trading strategies
Data Source: Bloomberg
Data & Prices as of: 15/09/2021
Arun Leslie John
Chief Market Analyst
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