Let's say that I have $50k in my brokerage account. My broker will let me buy double my account's value on margin. I can buy 100 shares of TSLA at $820 per share and then sell a one year covered call with a strike price of $850 for $15k of fat premium.
I have a personal loan for $15k. I have been using my trading account to make the monthly payment. What if I withdraw the $15k premium and pay off the loan? By doing so, I would pay the loan off faster, save on the interest and I wouldn't have the pressure to make money on a weekly or monthly basis for the loan payment and I can just let money sit in TSLA shares until I close the covered call or it expires in a year.
What are the pros and cons of doing this? The stock can drop below my buy price and stay there longer but in that situation the option's premium would lose its value too. My broker said that I won't get a margin call as long as I have enough to cover 50% of the shares cost. The worst case scenario is that I might have to add $5-10K more if the stock continues to tank. If stock goes up then I can close the covered call and sell my shares when I break even or even profit.
I know I can always take the money out from my account without doing all this and pay the loan off but I wonder if my plan would work or not. Please let me know your thoughts.