I have to say at the outset that opening a covered call trade today felt uncomfortable. For me, it feels like the stock market has had an excellent run and is about to roll over. That being said, as a systematic trader I have to follow my processes.

Today, I bought Citigroup shares at $69.68 and sold ITM May-21 $69.50 calls for $2.18 which sets up a potential annualized return of 34%. I decided to sell ITM rather than OTM as my Market Timer is currently providing a low reading of 2.5.

Farfetch

Today, I sold my Farfetch shares to close out my unprofitable covered call trade in that stock with a 3.6% loss.

Qualcomm

Today, I sold my Qualcomm shares for $130.49 resulting in a profitable trade with a 4.2% profit.

April 16 Covered Call Trade Summary

I had nine covered call trades based on April 16 expiry dates and even with the Farfetch losing trade, the average annualized return including commissions was 30.9%. It would be wonderful if my CC trades provide these results every month but my trade results are, in large part, dependent on the movement of the broad market over which I have no control and little foresight.

I had three naked put trades close on April 16 and each produced a different result.

ViacomCBS (VIAC)

On April 07, I sold Apri-16 $40.00 puts for $0.32. Late in the trading session on Friday, VIAC was trading below $40.00 and I didn’t want to be assigned the shares so I bought the puts back for $0.70 resulting in a 1.1% loss (44.6% annualized). With a low delta of -14, this trade had a low probability of a loss but a low probability is not a zero probability.

Schlumberger (SLB)

On March 31, I sold Apr-16 $27.00 puts for $0.80. My intent was to be assigned the shares when the puts expired since SLB had been passing one of my covered call screeners and rather than purchase the shares outright, I wanted to sell puts until I was assigned the shares and then sell covered calls. This is known as “The Wheel” strategy. Shares of SLB closed the Friday session below the put strike so I will be assigned the shares on Tuesday. My net share cost will be $26.22 which is ever so slightly below the Friday close.

The astute reader will note that there is a risk with me initiating a covered call trade and that risk that goes against what is, for some, a cardinal CC rule. Do you see anything in the table that would make you hesitate to initiate a covered call with SLB?  The earnings date is April 23 and I generally do not hold a stock in a CC trade through an earnings report. I am going to make an exception for this trade.

Peloton (PTON)

On April 09, I sold Apr-16 $110.00 puts. PTON closed the trading session on Friday at $116.21 so the shares will not be assigned to me and I keep the premium.