The Trade at a Glance
- Account Size: $100K
- Underlying Stock: Target Corp. ($TGT)
- Shares Held: 100 (cost basis $135.50)
- Strategy: Sell 1 Covered Call
- Expiration: January 16 2026
- Strike Price: $140
- Premium Collected: $170
Key Metrics
- Max Profit: $170 premium + $4.50 per share capital gain if called away ($135.50 → $140)
- Break‑Even on Shares: $135.50 – $1.70 = $133.80
- Upside Capped: Above $140 the stock is called; we bank gains plus premium.
Why We Like This Call Sale
- Turn Shares into Yield – The $170 credit provides immediate income, boosting portfolio cash flow.
- Comfortable Exit Price – Happy to let TGT go at $140, locking in profits while keeping downside manageable.
- Low IV but Long Time – Even modest premiums add up on long‑dated calls; plenty of time to adjust or roll.
Risk Management
- If TGT rallies strongly, we can roll up/out to participate in more upside.
- If price stagnates, premium decays; consider buying back early if it falls to 20‑25% of credit.
- Downside protected by premium and reduced effective basis of $133.80.
Final Thoughts
Covered calls on quality retailers like Target are a low‑maintenance income play—perfect for our $100K income‑focused account.
📢 Follow trade updates on X: @ThetoplistC
#OptionSelling #OptionCredits #CoveredCall #TGT #IncomeStrategy