Credit Spread on FUV – 6.52% potential return in 37 days

On December 9, 2020, we sold a bull put credit spread on FUV stock with an expiry set in the next 37 days.

These trades come as the #16 and #17 in the month of December, according to our trading plan for this month, the premium generated from this trade makes us about 5.92% from our $1,100 monthly goal. While in total we have reached already 47.43% so far. Awesome

Arcimoto is an electric vehicle company headquartered in Eugene, Oregon that manufactures and sells the Fun Utility Vehicle, or FUV, a tandem two-seat, three-wheeled electric vehicle. They also sell van-variations on the design "Rapid Responder" for emergency services, and "Deliverator" for last-mile deliveries.

Here is our trade setup:

  • BOT 1  FUV  JAN 15 '21 - 10+ 7.5 Put Bull Spread -0.70 USD 

For this trade, we got a premium of 65.2 USD (after commissions) or a 6.52% potential income return in 37 days. 

What happens next?

On the expiry date (January 15, 2020) FUV is trading above $10 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If FUV trades under $10 on the expiry date, we get assigned.

But as we already have collected a premium of $0.65 per share, our break-even price for this trade then is $10-$0.65= $9.35

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $7.5, our second bought put will work as insurance and will minimize our potential losses.

In case of assignment, we are ready to spend $1,000 to buy 100 shares with FUV stock

Selling credit spreads with FUV stock
Selling credit spreads with FUV stock
  • Running Total  2 Trades since December 9, 2020

  • Options income: $65