To The Moon

 

My SPYG Covered Call Strategy: Analyzing Potential Earnings 🎯

I currently hold 100 shares of SPDR Portfolio S&P 500 Growth ETF (SPYG), with an average cost basis of $87.20 per share. On December 17, 2024, I sold a covered call option with a $90 strike price, expiring on December 20, 2024, for a premium of $1.60 per share, or $160 in total. Here’s how I calculated my potential earnings from this trade.

Premium Income and Potential Capital Gains 🤑

1. Premium earned:

I collected $1.60 per share, amounting to a total of $160. This is immediate income, which I keep regardless of what happens to SPYG’s price by expiration.

2. If SPYG is called away (price rises above $90):

• I would sell my shares at $90 per share.

• My capital gain per share would be $90 - $87.20 = $2.80.

• For 100 shares, the total capital gain would be $280.

3. Combined profit if SPYG is called away:

• Premium: $160

• Capital gains: $280

• Total profit: $440.

Yield and Percentage Return 📊$SPDR Portfolio S&P 500 Growth ETF(SPYG)$  

1. Premium yield:

• $160 ÷ ($87.20 × 100 shares) = 1.83% return upfront.

2. Total return (if SPYG is called away):

• $440 ÷ ($87.20 × 100 shares) = 5.05% total return.

If SPYG remains below $90 at expiration, I keep my shares and the $160 premium. This would allow me to repeat the strategy with another call option in the future.

Disclaimer 🛑

This is not financial advice but simply a record of my own investment journal. I write these calculations to better understand my trading strategies and potential outcomes. Every investor should make decisions based on their own research and risk tolerance.

$SPYG 20241220 90.0 CALL$ 

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