Check out the video about to see my short-term play on $MARA (Marathon Digital).
I started a position this morning by purchasing 100 shares for around $11.35 x 100 shares ~ $1,135.
I waited a few hours for the market to recover and towards the end of the day I decided I wanted to either get out of the position or sell some premium against it via a Covered Call option.
I decided to go with the second option and sell a covered call to collect some option premium. I went ahead and sold an in the money covered call at the $11 strike.
Typically, I only sell covered calls at strikes that are higher than my original cost basis. However, in this case the premium was enough to get me above my original cost basis.
Which ended up being around $0.65 or $65 worth of premium for the option.
So, I sold the $11C for $65 meaning I was willing to sell my shares away at $11.65 or $1,165, netting a $30 gain on the short-term swing play.
With selling the in the money option instead of out of the money, I collected more premium but limited more of my upside. By limiting more of my upside, I also got more downside protection.
Results-
Return on Risk: $30 / $1,135 for 2.6% return
Downside Protection: $65 / $1,135 – 5.7% downside protection
With the current volatility in the market, I was fine with giving up more upside for more downside protection.
We will see how things turn out tomorrow for $MARA and the overall market.
Stay tuned for more content, feel free to leave your thoughts down below in the comment section. 👇👇
