BCRX – Covered Call – 19.12% potential return in 15 days

Updated: 28 May, 2020 seen 68

On April 30, 2020, I bought 110 shares of BCRX, paying $3.875 per share. BCRX is a small pharma doing a clinical study on galidesivir for treating the novel coronavirus disease (COVID-19).​

Found this name on Biotech Stocks Under $5. After a quick read on Yahoo Finance and options price research - I decided to sell covered call options on this stock. This is a bit of gambling, but as the money invested is not large, this is the gamble I'm ready to take

Here is the setup

  • BOT 100 BCRX Stock 3.875 USD
  • SLD 1 BCRX MAY 15 '20 4 Call Option 0.62 USD 

Potential income return 19.12% in 15 days
Break-even: $3.25

If the stock will trade above $4.00 on the expiry day - very well, I realize my max gain, 100 shares get called away. I keep 10 shares for a memory or seed for the future buys

If trades in between $3.25-$4.00 I keep selling covered calls

If trades below $3.25 - my max loss, in such scenario I will most probably double up to lower the cost basis and keep selling covered calls.

Selling covered calls with BCRX

Selling covered calls with BCRX