📌 Why I Sold an MFC Call Option at a $28 Strike for $2
I decided to sell a covered call on MFC with 66 days to expiration at a $28 strike price, collecting a premium of $2 per share. This trade provides a solid return while considering the upcoming February dividend, which I anticipate will lead to early assignment.
🔹 My Thought Process:
1️⃣ High Premium Collection 💰 – The $2 premium is quite attractive, offering an immediate yield on the position, reducing my cost basis and boosting overall returns.
2️⃣ Stock Likely to Be Called Away 📈 – With the strike price below the current market price ($29.80) and the dividend coming in February, there’s a strong chance my shares get called away a month early. This would allow the call buyer to capture the dividend, which is an expected outcome.
3️⃣ Locking in Gains 🏆 – I bought MFC around $29.55, so if my shares get called at $28 + $2.10 premium, my effective sell price is $30.10. This ensures I lock in a profit while also collecting an upfront premium.
4️⃣ Risk-Free Income in a Sideways Market 🛡️ – MFC has been range-bound, hovering around $29-$31. By selling a call, I generate additional income rather than just holding the stock passively.
5️⃣ Dividend Timing Strategy 📅 – The call will likely be exercised before the ex-dividend date, so I am prepared to lose my shares early. However, the trade is still profitable with the premium factored in.
📌 Final Thoughts – A Smart Covered Call Play
By selling this call, I am monetizing my MFC shares, securing a solid return, and managing risk effectively. If the stock doesn’t get called early, I keep the premium and the dividend, maximizing my income from this position. Either way, it’s a win-win trade! 🚀💰@TigerTradingNotes @TigerStars @Daily_Discussion @CaptainTiger @TigerEvents
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