29d • General discussion
MITK update!!
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.
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MITK update!!
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