I am recommending we sell a call on our uncovered General Motors (GM) shares to generate income and reduce our cost basis on the position. We are going with a strike price that is close to the money and will roll it up if the stock keeps running.
You can enter today’s trade even if you were not in the previous position. Just be sure to purchase 100 shares of the stock first for every call you plan to sell. Also, note that we will be managing and tracking the trade based on the ongoing position.
Current Stock Price: $34.97
Cost Basis: $49.79
Action: Sell to open the GM Mar Week Five (3/31) 35 Call
Current Option Price: $0.93-$0.99
Recommended Limit: Set your initial limit order at $0.96, but adjust as needed to sell a call today
New Cost Basis: $48.83
Expiration: After the close on Friday, March 31
Potential Rate of Return: I am targeting breakeven for this position