We held off on selling a call on United Airlines (UAL) last week as the stock was running up. It closed the week 7% higher, bringing shares closer to our cost basis. With the stock pulling back today, we have an opportunity to sell a call to generate income and reduce our cost basis on the position.
Note that the company is expected to report earnings in the third week of April. If we are called out of our shares, we will re-enter the position after the announcement. If our call expires worthless, we will either sell shares ahead of earnings or hedge the position with a protective put.
Current Stock Price: $43.34
Cost Basis: $48.54
Action: Sell to open the UAL Apr Week Two (4/14) 44 Call for around $0.97, but adjust as needed to sell a call today
New Cost Basis: $47.57