GPS – Covered Call – 8.37% potential return in 7 days

Updated: 4 June, 2020 seen 94

On May 1, 2020, I bought 110 shares of GPS, paying $7.585 per share. GPS is the ticker name of the Gap, Inc., commonly known as Gap Inc. or Gap, an American worldwide clothing and accessories retailer.​

GPS has been on my radar since the end of the March when I sold a ratio back spreads on it in the hopes of an explosion in price, to make me a quick buck. As the explosion didn't happen and my ratio back spread contracts come to maturity  in May I decided to take a little risk and buy some shares to sell a covered call against them.

Here is the setup:

  • BOT 110 GPS Stock 7.585 USD
  • SLD 1 GPS MAY 08 '20 8 Call Option 0.22 USD

Potential income return 8.37% in 7 days
Break-even: $7.365

If the stock will trade above $8.00 on the expiry day - very well, I realize my max gain, 100 shares get called away. I keep 10 shares for memory or seed for the future buys

If trades in between $7.365-$8.00, this option contract expires worthless and I keep selling more covered calls

If trades below $7.365 - my max loss, in such a scenario I will most probably double up to lower the cost basis and keep selling more covered calls.

Selling covered calls with GPS

Selling covered calls with GPS


Hi! My name is Reinis Fischer (38), a proud dad and devoted husband. CEO and Founder of Terramatris crypto hedge fund, drone enthusiast, world traveler, photographer, and passionate lover of Georgian cuisine (vegetarian).

An ex-pat living in Georgia since 2011, I trade stocks, take photographs, work out at the gym, and many more. Here I write about travel, finance, and other things that might interest me.