The Trade at a Glance
- Underlying Stock: CleanSpark Inc. ($CLSK)
- Strategy: Buy 100 Shares and Sell 1 Covered Call
- Expiration: February 7
- Strike Price: $11
- Total Debit: $1,041
- Purchase Price: 100 CLSK bought at $1,086
- Call Premium Received: $45
Key Metrics
- Max Profit: Capped at the strike price ($11), plus premium received.
- Break-Even Price: Cost basis per share.
- Return on Investment: Depends on call premium and stock movement.
- Risk: If $CLSK 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 $CLSK rises to $11 or beyond, the shares may be called away at a targeted profit level.
Defined Risk & Capital Efficiency
A $5K account can effectively utilize this trade to gain stock exposure while generating option premium income.
Risk Management
- Downside Risk: If $CLSK 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 $CLSK long-term if the call isn’t exercised.
Why $CLSK?
CleanSpark is a renewable energy and Bitcoin mining company, providing growth potential with volatility. 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 $5K account, this $CLSK trade optimizes capital usage, offering a combination of stock exposure and premium collection.
Ready to Explore Options?
Follow our blog for more strategies, and never risk more than you’re willing to lose. Options involve risks—consult a financial advisor if needed.
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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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