Options Trade – FirstEnergy Corp (FE)

I made a Covered Call trade on FirstEnergy Corp (FE) yesterday during the market dip – really trying to find any value in this crazy market.

Because of the high implied volatility in the middle of the day, I was able to make the following trade:

• Bought: 1000 shares of FE at $29.52
• Sold: Ten (10) February 19, 2021 Calls
• Strike Price: $32.00
• *Premium Collected: $520.00

So, my entry price for FE was $29.00. If I am forced to sell the 1000 shares in February 2021 at the $32.00 strike price, my profit will be approx. $3,000.00.

Since my entry price is over a 32% discount to FirstEnergy’s Fair Value of $43.00 per share, I feel this trade provided a comfortable Margin of Safety.  FirstEnergy also pays a strong 5.29% dividend that I will start collecting in February 2021 if I manage to hold onto the shares.

*Excludes transaction costs.