Credit Spread on CRBP – 8.64% potential return in 44 days

On September 2, 2020, we sold a bull put credit spread on CRBP stock with options expiry set in the next 44 days.

CRBP  - Corbus Pharmaceuticals Holdings, Inc. is a Phase 3 clinical-stage pharmaceutical company focused on the development and commercialization of novel therapeutics to treat inflammatory and fibrotic diseases by leveraging its pipeline of rationally designed, endocannabinoid system-targeting drug candidates

Pharma and Biotech stocks have some juicy premiums, that's one of the reasons we like them. 

Here is our trade setup:

  • BOT 1 CRBP OCT 16 '20 - 5+ 4 Put Bull Spread  -0.48  USD  

For this trade, we got a premium of 43.20 USD (after commissions) or 8.64% potential income return in 44 days (if options expire worthless)

These trades come as the #1 and #2 in the month of September, and if we stick with our trading plan for this month, the premium generated from this trade makes us about 5.4% from our $800 monthly goal.

What happens next?

On the expiry date (October 16, 2020) CRBP is trading above $5 per share -  options expire worthlessly and we keep premium - if CRBP trades under $5 on the expiry date, we get assigned.

But as we already have collected a premium of 0.43 per share, our break-even price for this trade then is $5-$0.43 = $4.57

In other words, CRBP can fall from the current price of $9.01 down to $4.57 and we will still be break-even

Selling Credit Spreads with CRBP stock

Selling Credit Spreads with CRBP stock
  • Running Total  4 Trades since August 27, 2020
  • Options income: $77