My first monthly results are in, and watching the price movements of each stock and the market in general were quite the roller coaster!
So where did all my January 15th covered call options end up? Let’s take a look!
Results From Call Expiration
I bought seven stocks in December and wrote covered calls for each of them for January 15th expiration. Out of the seven, four were exercised and called away and three were not.
My initial profit for the month was $12,491.22, which sounds pretty darn good, right? Well, not so fast, because of the three stocks that I still held, one took a 51% haircut. The results of that option trade won’t be known until I actually sell the stock.
Here are the results of each covered call written in December:
Appian (APPN)
The 3 contracts that I sold for my 300 shares of APPN were exercised at the $145 strike price. The purchase price of the shares were $143.97, so the profit on the sale of the shares was $310.05. Adding in the premium of $4,403.81, the total earnings were $4,710.85 after taking out fees.
Fiverr (FVRR)
I had purchased 100 shares of FVRR for $204.15 per share, and the contract written was exercised at the $210 strike price. With the premium of $1,400 added to the $585 profit from the sale of the stock, earnings from FVRR totaled $1,983.80 after fees.
Lemonade (LMND)
LMND is a stock that took off and never looked back, resulting in the option being exercised early. I purchased 300 shares for $92.70 and sold 3 contracts with a strike price of $95. The option was exercised after the stock hit $160 in early January!
So I made my profit of $690 from the stock sale along with the $2,803 premium, for a total of $3,490.24 after fees. This was a great trade with excellent profits for both me and the option buyer!
Sareptha (SRPT)
Here’s where things went off the rails a little bit, to say the least! SRPT dropped 51% on bad news for one of the drugs in their pipeline.
I had purchased 200 shares for $171 each, writing 2 calls with the strike price of $175. After subtracting the premium received of $3,614, my new cost basis is $30,587.45 after fees, which amounts to $152.94 per share. The stock closed at $90.32 at option expiration.
Square (SQ)
I wrote 1 contract on the 100 shares of SQ purchased for $225.89, and the strike price was $230. The closing price on January 15th was $227.75, so the option was not exercised. My new cost basis is $21,397.72 for $213.98 a share after fees.
Fastly (FSLY)
The 200 FSLY shares were purchases for $102.66 a share, and 2 contracts were written with the strike price of $104. The closing price on the 15th was $88.21, so this option was also not exercised. After adding in fees, the new cost basis is $18,886.42 for a share price of $94.43.
Etsy (ETSY)
I purchased 200 shares of ETSY for $188.87 per share and wrote 2 contracts with a strike price of $190. The call was exercised, and the profit was $225,61 from the sale of the stock. Adding in the premium of $2,803, the earnings were $2,306.33 after fees.
Overall, it was a very positive month in terms of successful option trades. But, as predicted, there are losses along with the gains that I’ll have to mitigate as much as possible.
Trading Notes and Strategy Changes
As I wrote earlier, this month was a roller coaster with a lot of volatility. One stock screamed upward, while one dropped like a rock, and everything else somewhere in between.
I learned one very big lesson this month, which came from the SRPT loss. Looking back at the info available at the time of purchase, I still feel it was a legitimate buy.
However, as I wrote in my December post, I felt it was the riskiest stock in my option portfolio. So it would’ve made more sense to limit that risk by only purchasing 100 shares.
I know that the high premium paid was what encouraged me to take a bigger position. So going forward, I need to reduce my position size with riskier stocks and not be tempted by a big premium.
As things stand right now, there’s no reason to believe the price of SRPT is going to rebound to previous levels any time soon. So the strategy going forward is to write more calls on my shares in order to keep decreasing my cost basis.
The volatility of the stock will determine how many times I can repeat the strategy. I’ll have to balance the premium and the strike price to get the best chance of reducing my losses.
If the stock price stays below the strike price, I’ll keep the shares and continue to write more covered calls for more premiums. However, as soon as it jumps over the strike price and the shares are called away, I’ll have to record whatever loss there is at that time
Another takeaway from January that I’d like to note is the run up in LMND. When setting out my strategy and trading plan, I had to make sure I accepted the fact that I’d give up big upside gains.
I thought that I’d have a lot of stress if a stock’s price increased dramatically without being able to profit from it. But I have to admit that I was happy with my profit on that trade.
I only bought the stock to write the covered call, and the price went up so fast that rolling it into another call with a higher strike price wouldn’t have been worth it. I received the potential profit calculated when I bought the stock and consider it a terrific trade!
New Covered Call Options For February
So February is a new month! The monthly call expiration date is the 19th, so all the covered calls I sold are for that date.
Here is a list of the stocks purchased and calls written for February:
Sareptha (SRPT)
I wrote 2 calls on my SRPT shares for the $95 strike price and received a premium of $7.73 per share for $1,546. The stock price has somewhat stabilized around $90 per share.
If it rises during the month, I will consider rolling my call up to a higher strike price. But the numbers will have to make sense with the premiums I’d pay and receive at the time.
If the option is exercised, my total loss on this stock will be $10,042.86 plus fees. So we’ll see what happens with this one!
Square (SQ)
I was able to write 1 contract on my SQ shares for the same strike price as last month, $230. The premium received was $12.06 per share for $1206. 
With the new cost basis at $20,192.44, if the option is exercised, I have a potential profit of $2,805.56 before fees.
Fastly (FSLY)
With my 200 shares of FSLY, I wrote 2 covered calls for the strike price $92.50. The premium was $10.17 per share for a total of $2,034.
During the next few days after selling my call options, FSLY was in a steady upward trend, and I ran the numbers to see if I could take advantage of it by rolling up to a new strike price. The answer was yes!
I bought back my 2 call contracts for $19.10 a share, then sold 2 more calls for the $102 strike price, receiving a premium of $14 per share. While taking a loss on the original call, I’m ending up with a much higher potential profit.
Before rolling this option to a higher price, I also took into consideration what would happen if the price dropped again. My cost basis would still be lowered by approximately $1000, so I’m confident that this was a beneficial move.
With the new cost basis of $17,876.69, if the option is exercised, I have a potential profit of $2,523.21 before fees.
Crowdstrike (CRWD)
Crowdstrike is a very timely company to be investing in right now, I believe. It specializes in cybersecurity and is based in the United States. With more and more people working remotely, I have confidence in this stock.
I purchased 100 shares of CRWD for $217.92 per share and sold 1 call option. The strike price was $220, and the premium received was $12.72 per share for a total of $1,272 before fees. This represents 5.8% of my investment.
Fiverr (FVRR)
While the price of FVRR has risen since last month’s purchase, I believe it’s well worth the price of $239.06 that I bought 200 shares for.
The strike price of the 2 call options sold were for the $240 strike price, and I received a premium of $24.63 for a total of $4,926 before fees. This premium represents 10.3% of my FVRR investment.
Lemonade (LMND)
I normally wouldn’t buy a stock again once it’s had a big run up like LMND did last month. But the stock had pulled back somewhat to a more reasonable range, so I purchased 300 more shares for $140.91 per share.
The 3 call options were sold for the strike price of $141 with a premium of $16.30 per share. The total premium of $4,890 represents 11.6% of my LMND investment.
Pinterest (PINS)
What can I say about Pinterest? I absolutely love it and use it for traffic to 3 of my websites. In my opinion, the potential is enormous, and I was very happy to purchase 400 shares at $70.72 per share.
Four calls were sold at the strike price of $73 with a premium of $6.58 per share for $2,632. This represents 9.3% of my total PINS investment,
Bandwidth (BAND)
BAND is a top CPaas company, which is a communications platform as a service. Their network infrastructure is huge, and they have customers such as Zoom, Alphabet, and Microsoft. In this day and age, it’s another very timely company to own, I believe.
I purchased 100 shares at $163.57 and sold a call option with $165 as the strike price. The premium received was $11.97 per share for $1,197 before fees. This represents 7.3% of the total investment in BAND.
Potential Monthly Profit
The covered call options that I sold this month for the February 19th expiration date have the potential to earn $18,668.71. However, that will be cut by more than half if the SRPT option is exercised.
As always, anything can happen in the stock market at any time. So we’ll know more results after the 19th!
Have you written any covered calls this month? Do you have any favorite stocks that lend well to earning income writing stock options? I’d love to hear about them in the comments below!
