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.
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.
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.