Let’s roll our General Motors (GM) call out one week and to a lower strike price to generate more income. The goal is to have our shares called away before the company’s earnings report on April 25.
If our shares are not called away, we will sell them ahead of the announcement to avoid earnings risk.
Current Stock Price: $34.66
Cost Basis: $48.26
Action:
- Buy to close the GM 14 Apr 35 Call for around $0.17
- Sell to open the GM 21 Apr 34.50 Call for around $0.85
- Set your initial credit limit at $0.68, but adjust as needed to roll today
New Cost Basis: $47.58
Expiration: After the close on Friday, April 21
Potential Rate of Return: We are targeting breakeven for the position