Credit Spread on GPS – 0.88% potential return in 9 days

On November 25, 2020, we sold a bull put credit spread on GPS stock with expiry in the next 9 days.

Here is our trade setup:

  • BOT 1  GPS  DEC 04 '20 - 20.5 + 19.5 Put Bull Spread -0.23 USD 

For this trade, we got a premium of 18.20 USD (after commissions) or a 0.88% potential income return in 9 days. 

These trades come as the #38 and #39 in the month of November, according to our trading plan for this month, the premium generated from this trade makes us about 4.04% from our $450 monthly goal, while in total we have already reached 254% so far.

So what happens next?

On expiry date (December 4, 2020) GPS is trading above $20.5 per share -  options expire worthlessly and we keep premium - if GPS trades under $20.5 on the expiry date, we get assigned.

But as we already have collected a premium of 0.18 per share, our break-even price for this trade then is $20.5-$0.18 = $20.32

Selling Credit spreads with GPS stock

Selling Credit spreads with GPS stock
  • Running Total 17 Trades since May 1, 2020
  • Options income: $227