Good morning everyone — here’s a real-world covered call example using MITK. Last Friday: ✅ We bought 1,000 shares of MITK at $14.58 ✅ We sold 10 covered call contracts ✅ Strike price: $17.50 ✅ Expiration: May 15 ✅ Premium collected: $0.59 per share That brought in: 💰 $590 gross premium collected upfront After the market closed yesterday, MITK reported record earnings. However, despite the strong earnings report, the stock dropped this morning and is trading around $14.04. Why can this happen? Small-cap stocks can be volatile. In this case, the selling may be related to: • insider selling • profit taking • market expectations already being priced in This is important for beginners to understand: 👉 A company can report good earnings and still see the stock fall. Now here’s where covered calls help. Because we collected $590 in option premium, our adjusted cost basis dropped from: $14.58 → approximately $13.99 per share So even though the stock pulled back, the option premium helped reduce downside risk. Current situation: • Stock price: about $14.04 • Adjusted basis: about $13.99 • Calls currently out of the money Our likely plan: ✔️ Let the calls expire worthless ✔️ Keep the premium ✔️ Continue selling covered calls again next cycle (“rinse and repeat”) That’s one of the major benefits of covered calls: Generating income while lowering your effective share cost over time.

Last Friday we purchased shares of small cap Applications software company , Mitek systems. We purchased 1000 shares for $14.58. We believe the company is in the beginning of a breakout, with bullish price-volume correlation. We noticed they have earnings this Thursday May 7th after market close. So this morning we sold 10 contracts, of the May 8th expiration , $17.5 strike for $59 a contract , we collected $590. Will update this trade on Friday.

As we posted early Saturday morning, we got put to 1000 shares of Rivian at $17, but because we had sold 10 cash secured puts for $100 a contract. Our cost basis is $16 ,subsequently this morning Rivian has fallen down to $14.58., so what we did earlier this morning as we now own 1000 shares of Rivian and we control 10 contracts and we sold the weekly May 8th expiration $16.5 calls for $8 a contract . The probability of it being in the money right now is 5.82% , so if it does rally and we do get called away at the end of the week, we will be at a cost basis of $15.92,, so what we’ve achieved is we’ve brought our cost basis down and we continue to own our shares. We will continue to monitor this trade thruout throughout the week.

Wanted to follow up on our trade on Rivian, if you recall , we sold 10 contracts of the weekly $17 puts for $100 a contract. We knew RIVN was going into earnings after market on Thursday and we wanted to own some shares, but own them cheaper. So by selling the $17 strike, we would be put to it at $17 a share, but would take our cost basis down to $16 a share after collecting $100 a contract. Well we got put to the stock. Even though RIVN had beat and guided up, they had stated they would do an offering. Stock closed at $15.02, so as of now we are down $980. So what to do now? This is where our covered call strategy comes into play. On Monday we will look to see what the weekly $17 strike is trading at and sell 10 contracts. Will update again on Monday. Have a great weekend everyone.

Wanted to give an update on our VG trade we put on 2 weeks ago , we sold 22 contracts of the May 15 , $15 calls for $95 a contract for gross proceeds of $2090. At the time the stock was trading at $13.23 a share. Right now the stock is trading at $12.25, we could buy back those contracts for $33 a contract if we close right now. With a 16.66% chance of being in the money , we are going to wait another week and have theta “Time Decay” keep working for us . We will revisit this trade next Monday. Have a great trading day everyone!!!!