1/26/2020 Plan: United Airlines – UAL – Sell 7 FEB UAL 77/75 put spread for 0.24 credit
- We sell the Sell 7 FEB UAL 77/75 . Intent is to go to expiration, will remove early with a big move up on UAL. Would happily take shares at a more than 1 year low if United Airlines lands between our strikes in a couple weeks.
- Prior to July 2018 earnings was the last time UAL was below 77
- Prices are as of market close 1/24/2020, actual fill and strikes may differ depending on Monday open , post will be updated accordingly
- All trades are for educational purposes and do not constitute advice
1/27/2020 Entry: Sold the 31 Jan UAL 76/74 for a 0.33 credit on the dip down in the market.
1/31/2020 Exit: accepted delivery of UAL at an effective price of 75.67. UAL closed at 74.80
2/2/2020 Plan: sell 76 weekly call for 1.07 or greater.
2/3/2020 Entry: sold 77 call for 1.34 -0.27 more than planned and $100 more upside with the strike
2/7/2020 Exit: UAL was called away for maximum profit. UAL ended at 79.48. One could have closed at many times during the week for a nice profit.
Analysis – we gained $1.67 in credits, plus $1 in capital appreciation for $267 in profit per contract/covered call in just 2 weeks time. If stock was purchased on margin, this is about a 7% return on $3800 of risk in two weeks. Even without margin, this is a 3.5% return in 2 weeks which would be 91% annualized. Note that one can lower the strike on the covered call to increase the credit and the probability of getting called away or increase the strike to decrease the credit, lower the probability of getting called away, but increase the potential capital gain.
