Wells Fargo has taken a beating in 2019 and 2020. With stock falling significantly, I believe the stock is due for a bounce. I bought 100 shares on 6/3/2020 @ $28.86 and due to volatile expectancy of this stock, I sold an ITM 28.50 sell call for a credit of $2.12. My max profit is $212 - intrinsic value ($36) =$176 or 6.09% max profit at expiration on July 10th, 2020.
I do think the stock could go up 6% in the next 30 days, but it also could be very choppy. To limit my risk, the covered call protects my position to the break even price of 26.74. I will also reach my max profit as long as the stock stays above 28.50; In this scenario, I have a higher probability of success than just by the shares, at the same time, I do limit my profits.
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