On December 14, 2020, we sold a bull put credit spread on GPS stock with expiry in the next 25 days.
Here is our trade setup:
- BOT 1 GPS JAN 08 '21 - 20 + 18.5 Put Bull Spread -0.48 USD
For this trade, we got a premium of 43.20 USD (after commissions) or a 2.16% potential income return in 25 days.
These trades come as the #23 and #24 in the month of December, according to our trading plan for this month, the premium generated from this trade makes us about 3.92% from our $1,100 monthly goal. While in total we have reached already 68.69% so far. Awesome.
So what happens next?
On expiry date (January 8, 2021) GPS is trading above $29 per share - options expire worthlessly and we keep premium - if GPS trades under $20 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 $20-$0.43 = $19.57
- Running Total 19 Trades since May 1, 2020
- Options income: $270