On August 6, 2020, we sold a bull put credit spread on SDC stock with expiry in the next 22 days.
Here is our trade setup:
- BOT 1 SDC AUG 28 '20 - 7.5 + 6 Put Bull Spread -0.28 USD
For this trade, we got a premium of 23.20 USD (after commissions) or a 3.31% potential income return in 22 days. Slightly bit more than a dollar per day.
These trades comes as the #8 and #9 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 3.09% from our $750 monthly goal, while in total we have already reached 19.86% from our monthly goal so far.
So what happens next?
On expiry date (August 28, 2020) SDC is trading above $7.5 per share - options expire worthlessly and we keep premium - if SDC trades under $7.5 on the expiry date, we get assigned.
But as we already have collected a premium of 0.23 per share, our break-even price for this trade then is $7.5-$0.23 = $7.27
In other words, SDC can fall from the current price of $8.94 way down to $7.27 and we will still be break-even
- Running Total 19 Trades since April 27, 2020
- Options income: $418