$100K Account – Opening Trade TGT Covered call

The Trade at a Glance

  • Underlying Stock: Target Corp. ($TGT)
  • Strategy: Buy 100 Shares and Sell 1 Covered Call
  • Expiration: February 7
  • Strike Price: $140
  • Total Debit: $13,550

Key Metrics

  • Max Profit: Capped at the strike price ($140), plus premium received.
  • Break-Even Price: Cost basis per share.
  • Return on Investment: Depends on call premium and stock movement.
  • Risk: If $TGT declines significantly, potential losses on stock ownership.

Why This Trade Makes Sense

Income Generation

Selling the covered call generates premium income, lowering the effective purchase cost and enhancing returns.

Stock Ownership with Potential Upside

If $TGT rises to $140 or beyond, the shares may be called away at a targeted profit level.

Defined Risk & Capital Efficiency

A $100K account has ample room to execute this strategy while maintaining liquidity.


Risk Management

  • Downside Risk: If $TGT declines, you hold the shares at a higher cost basis.
  • Mitigation: Consider stop-loss levels or rolling the call option to a later date.
  • Mindset: Be prepared to hold $TGT long-term if the call isn’t exercised.

Why $TGT?

Target is a well-established retail giant, providing steady performance and dividend income. This trade capitalizes on potential appreciation while generating income through call premiums. Always research the underlying stock and its sector trends before trading.


Final Thoughts

Covered calls are a balanced strategy for stockholders looking to generate additional income. For a $100K account, this $TGT trade optimizes capital usage, offering a combination of stock exposure and premium collection.


Ready to Explore Options?

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Disclaimer: This post is for educational purposes only. Past performance isn’t indicative of future results. Options trading carries significant risk.

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