Credit Spread on FCEL – 4.08% potential income return in 16 days

On September 2, 2020, we sold a bull put credit spread on FCEL stock with options expiry set in the next 16 days.

FCEL - FuelCell Energy, Inc. is a fuel cell power company. It designs, manufactures, operates and services Direct Fuel Cell power plants that run on natural gas and biogas. As the biggest publicly traded fuel cell manufacturer in the U.S., the company operates over 50 plants all over the world

Here is our trade setup:

  • BOT 1 FCEL SEP 18 '20 - 2.5+ 2 Put Bull Spread  -0.15  USD  

For this trade, we got a premium of 10.20 USD (after commissions) or 4.08% potential income return in 16 days (if options expire worthless)

Pay attention, we are using 0.5 wide credit spread here

These trades come as the #3 and #4 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 1.27% from our $800 monthly goal, while in total we have already reached 6.67% this month

What happens next?

On the expiry date (September 18, 2020) FCEL is trading above $2.5 per share -  options expire worthlessly and we keep premium - if FCEL trades under $2.5 on the expiry date, we get assigned.

But as we already have collected a premium of 0.1 per share, our break-even price for this trade then is $2.5-$0.1 = $2.4

In other words, FCEL can fall from the current price of $2.67 down to $2.4 and we will still be break-even

  • Running Total  2 Trades since September 2, 2020

  • Options income: $10