Credit Spread on AMC – 3.44% potential return in 28 days

On August 28, 2020, we sold a bull put credit spread on AMC stock with an expiry set in the next 28 days.

Here is our trade setup:

  • BOT 1 AMC SEP 25 '20 - 5 + 4 Put Bull Spread  -0.22  USD  

For this trade, we got a premium of 17.2 USD (after commissions) or a 3.44% potential income return in 28 days. 

These trades come as the #57 and #58 in the month of August, and if we stick with our trading plan for this month, the premium generated from this trade makes us about 2.29% from our $750 monthly goal, while in total we have already reached 124.16% from our monthly goal so far.

What happens next?

On expiry date (September 25, 2020) AMC is trading above $5 per share -  options expire worthlessly and we keep premium - if AMC trades under $5 on the expiry date, we get assigned.

But as we already have collected a premium of 0.17 per share, our break-even price for this trade then is $5-$0.17= $4.83

In other words, AMC can fall from the current price of $6.30 way down to $4.83 and we will still be break-even

Selling credit spreads with AMC stock
Selling credit spreads with AMC stock
  • Running Total  9 Trades since August 3, 2020
  • Options Income: $137