Credit Spread on SDC – 2.74% potential return in 24 days

On August 25, 2020, we sold a bull put credit spread on SDC stock with expiry in the next 24 days.

Here is our trade setup:

  • BOT 1  SDC  SEP 18 '20 - 7 + 6 Put Bull Spread -0.26 USD   

For this trade, we got a premium of 21.20 USD (after commissions) or a 2.74% potential income return in 24 days.

These trades come as the #50 and #51 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 2.56% from our $750 monthly goal, while in total we have already reached 113.07% from our monthly goal so far.

So what happens next?

On expiry date (September 18, 2020) SDC is trading above $7 per share -  options expire worthlessly and we keep premium - if SDC trades under $7 on the expiry date, we get assigned.

But as we already have collected a premium of 0.21 per share, our break-even price for this trade then is $7-$0.21 = $6.79

In other words, SDC can fall from the current price of $7.20 way down to $6.79 and we will still be break-even

Selling covered calls and puts with SDC stock
Selling covered calls and puts with SDC stock
 

  • Running Total  23 Trades since April 27, 2020
  • Options income: $505