Bought two lots of SLV at 15.74 and sold June 16 calls for 38 ea (45 delta strike). The IV was >20% today.
The position break even is reduced to 15.36 with a 4% max profit on the break even cost.
At 60 days to expiry, this yields 25% at an annualized rate.
Ideally the cost basis on the position can be further reduced after June with additional calls sold against the position in the months ahead. Thinkorswim analysis shows 60% probability of some profit.
Precious metals don't yield, but covered calls can be used to generate income against an existing ETF position.
Silver has been trading in an increasingly narrow range for the past year, and may continue to do so for some time yet.
The position break even is reduced to 15.36 with a 4% max profit on the break even cost.
At 60 days to expiry, this yields 25% at an annualized rate.
Ideally the cost basis on the position can be further reduced after June with additional calls sold against the position in the months ahead. Thinkorswim analysis shows 60% probability of some profit.
Precious metals don't yield, but covered calls can be used to generate income against an existing ETF position.
Silver has been trading in an increasingly narrow range for the past year, and may continue to do so for some time yet.