Credit Spread on RIOT – 12.08% potential income return in 43 days

On August 13, 2020, we sold a bull put credit spread on RIOT stock with an expiry set in the next 43 days. For this trade, we get a premium of $35 (before commissions)

RIOT stands for Riot Blockchain company focused on building, supporting, and operating Blockchain technologies. 

Here is our trade setup:

  • BOT 1 RIOT SEP 25 '20 - 2.5 + 1.5 Put Bull Spread  -0.35 USD 

For this trade, we got a premium of 30.2 USD (after commissions) or a 12.08% potential income return in 43 days.

These trades come as the #28 and #29 in the month of August, and if we stick with our trading plan for this month, the premium generated from this trade makes us about 4.02% from our $750 monthly goal, while in total we have already reached 55.46% from our monthly goal so far. 

Also, we have cracked already $3,000 in options premium since May 2020

What happens next?

On expiry date (September 25, 2020) RIOT is trading above $2.5 per share -  options expire worthlessly and we keep premium - if RIOT trades under $2.5 on the expiry date, we get assigned.

But as we already have collected a premium of 0.30 per share, our break-even price for this trade then is $2.5-$0.3 = $2.2

In other words, RIOT can fall from the current price of $3.61 way down to $2.2 and we will still be break-even

As we are selling credit spread here, in case RIOT suddenly drops bellow our second bought put at the strike price $1.5 it will help to mitigate risk, in other words - selling credit spreads has a lot of advantages.

Selling credit spreads on RIOT stock
Selling credit spreads on RIOT stock

  • Running Total  5Trade since July 15, 2020
  • Options income: $110