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
Running Total 2 Trades since December 9, 2020
Options income: $65