CC OTM Covered Calls Buy-Write Strategy

Overview

This is about the CC stocks I purchased and sold the CC OTM Covered Calls. CC is The Chemours Company’s symbol. This is a buy-write strategy.

Wilmington, Delaware-based The Chemours Company is a major supplier of performance chemicals that are used in a wide range of end-products and processes. Chemours began operations as a separate entity in July 2015, following its separation from E.I. du Pont de Nemours and Company (“DuPont”).

The Chemours Company’s stock has risen about 26% in the last six months. The stock price is in an uptrend channel that is rising. It benefits from increased demand for Opteon in mobile apps, as well as great cost-cutting efforts.

What Happened

On 6/23/2021, I bought CC for $34.34 per share and sold the 7/16/21 $35 call for $1.13 per call. CC closed at 34.36.

The return on selling the 7/16/2021 call at the strike price of $35 is 3.23 percent, or 51.24 percent annualized, based on the stock purchase price of $34.34 per share and the call option sold for $1.13 per call. The return on this investment is 5.21 percent, or 82.72 percent yearly, if the option is exercised, i.e. the stock closes at $35 or higher on July 16, 2021.

As seen in the daily Renko chart below, the CC stock recently broke above the $34.50 resistance level. My stock was purchased at $34.34 a share. The stock’s cost basis was lowered to $33.21 by the covered call I sold for $1.13 per call. There is some support between $32.50 and $33. The CC earnings report isn’t due until at least 7/23/2021. Given that the call expires on July 16, 2021, the risk associated with this transaction should be low.

The Chemours Company CC OTM Covered Calls Buy-Write Strategy 6/23/2021

What’s Next

I’d like to close the trade before the covered call expires on July 16, 2021. The major reason is that I do not want to keep the shares till the earnings report comes out. In addition, the stock has a support zone between $32.5 and $33. If the stock falls below this level, the next level of support is $30. That gap is huge. The risk is too high.

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