Introduction
This post concludes the Barrick covered call series by reviewing the final outcome of the first covered call trade. The goal of this series was not only to generate income through options but also to document the complete process step-by-step, beginning with the gradual accumulation of shares and ending with the final trade result.
Covered calls are commonly used by traders and investors to generate income while holding shares of a stock. By selling a call option against shares already owned, a trader collects a premium upfront while accepting the possibility that the shares may be sold at a predetermined strike price.
This trade series demonstrates how the strategy works in practice, including both the successful aspects of the option trade and the lessons learned from the final decision on the underlying shares.
Trade Setup: Accumulating the Underlying Shares
The trade began with the gradual accumulation of shares of Barrick Mining Corporation, rather than entering the full position at once. This staged approach allowed the position to be built deliberately while observing price movement and maintaining flexibility.
Shares were purchased in three separate transactions:
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50 shares at $41.35
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25 shares at $41.02
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25 shares at $47.23
This resulted in a total position of 100 shares with an average cost basis of approximately $42.73 per share.
The objective of this accumulation phase was simple: establish ownership of 100 shares, which is required to sell one standard covered call contract.
Covered Call Execution
After the full position was established, a covered call was sold against the shares.
Trade Details (Ledger):
Underlying Stock: Barrick Mining Corporation (B)
Position Size: 100 Shares
Option: Sold (-1)
Expiration: January 30, 2026
Strike Price: $49 Call
Premium Received: $1.33 per share
Total Premium Collected: $133
Option Metrics at Entry: Delta: -0.38; Theta: 4.7
The strategy behind this trade was straightforward. The premium provided immediate income, while the $49 strike price allowed room for the stock to rise before assignment would occur.
If the stock moved above the strike price at expiration, the shares would be sold at $49, locking in a profit on both the stock and the option premium.
Covered Call Outcome
The trade took an unexpected turn on January 30, 2026, when a news announcement regarding a nominee for Chair of the Federal Reserve triggered a sharp decline in gold prices.
Because Barrick is a gold mining company, the stock experienced increased volatility as the commodity market reacted to the news.
As the market moved rapidly, the call option lost most of its remaining value.
The option was bought back for $0.05, which locked in most of the premium that had originally been collected.
Options Profit:
Premium Collected: $1.33
Buyback Price: $0.05
Net Profit: $1.27 per share
Total Options Profit: $127
The options portion of the trade performed exactly as expected, with time decay working in favor of the seller.
Equity Trade Result
While the options portion of the trade worked well, the equity side of the trade revealed an important lesson.
During the broader market selloff, the decision was made to sell the 100 shares of Barrick at $45.78 per share.
This resulted in an equity gain of:
$299 total profit on the shares. However, had the shares remained in the account and the option been assigned at the $49 strike price, the equity gain would have been: $627 total profit.
After the sale, Barrick resumed its upward trend, meaning the position was exited earlier than originally planned.
Lessons Learned From the Trade
The covered call strategy itself worked exactly as designed. The option premium was collected and most of it was retained through time decay.
The primary mistake occurred on the equity side of the trade.
Selling shares during a market panic, especially when the original trade thesis has not changed, can often lead to exiting positions prematurely. In this case, the volatility spike created pressure to react quickly rather than allowing the strategy to play out fully.
Several important lessons came from this trade:
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Emotional decisions during volatility can reduce long-term profitability
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Covered calls require patience as expiration approaches
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The original trade thesis should guide decisions rather than short-term headlines
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Structured strategies work best when the process is followed consistently
Conclusion: The Complete Covered Call Series
This Barrick trade series documented the entire lifecycle of a covered call strategy from start to finish.
The process included:
Part 1 – Accumulating 50 Shares: The initial entry established the foundation for the covered call strategy.
Part 2 – Building the Position to 75 Shares: Additional shares were added to move closer to the required position size.
Part 3 – Completing the 100 Share Position: The full position was established, allowing the option strategy to begin.
Part 4 – Selling the First Covered Call: A call option was sold to generate income and define a potential exit price.
Part 5 – Covered Call Outcome: The option generated income while the stock position produced a profit, though the final exit occurred earlier than planned.
Overall, the trade demonstrated both the strengths and challenges of covered call strategies. The option premium provided reliable income, while the equity side highlighted the importance of discipline and patience.
Documenting trades in this way helps reinforce the most important principle in trading: improvement comes from reviewing the process, learning from outcomes, and applying those lessons to the next opportunity.
Next Step: Transition to the Wheel Strategy
Although this trade produced a positive result overall, the experience highlighted the importance of having a structured framework for managing both stock positions and option income strategies.
The next step in this trading journal will involve applying these lessons to the Wheel Strategy, which combines cash-secured puts and covered calls into a repeatable process.
The focus moving forward will be on Hecla Mining Company, a mining company that has demonstrated a steadier upward trend and may provide consistent opportunities for option premium collection.
Future posts will document this process in detail, including trade setup, execution, and outcomes.
Covered Call Trade Series
Part 1 – Barrick 50 Shares
Part 2 – Barrick 75 Shares
Part 3 – Barrick 100 Shares
Part 4 – First Covered Call on Barrick
Part 5 – Covered Call Outcome