Century Aluminum is an existing position taken just after the company released its quarterly earnings. We started a new position at 14.00, as the stock appears to be building the right side of a cup pattern.
Price is above the 9/20ema and rising. We are considering adding today and selling covered calls as the stock pushes into the upper Bollinger Bands. If the stock moves above Thursday highs, we will enter the position as outlined below.
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We would like to generate a minimum $175.00 in premium by trading covered calls on 500 shares of stock. We want to sell 5 contracts of CENX 2017 16-JUN 16.00 CALL at 0.35 or better ($175.00 net income). If the stock were to rise before expiration we should make a profit of $800 by expiration (500 shares avg. $14.75 > 16.00 = $625 + $175.00 in premium. This trade will also give us 2% of protection should the stock pullback before expiration.
Premium received: $175.00
Potential Profit if Stock is Above Strike: $800.00
Downside Protection: 2% (Breakeven $14.60)
Looking forward to the long weekend.
Happy Fry-Day,
Vinny
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