Credit Spread on SmileDirectClub (NASDAQ:SDC) – 1.16% potential income return in 7 days / 60.32% annualized

On November 13, 2020, we sold 2 bull put credit spreads on NASDAQ:SDC stock with an expiry set in the next 7 days. For this trade, we get a premium of $34 (before commissions)

These trades come as the #30 and #31 in the month of November, according to our trading plan for this month, the premium generated from this trade makes us about 5.42% from our $450 monthly goal, while in total we have already reached 168.87% so far.

SDC is one of our favorite stocks to trade credit spreads / covered calls on, since April 2020, this stock has made us the most options income so far.

Here is our trade setup:

  • BOT 2 SDC NOV 27 '20 - 10.5 + 9.5 Put Bull Spread  -0.17 USD 

For this trade, we got a premium of 24.4 USD (after commissions) or a 1.16% potential income return in 7 days.

What happens next?

On expiry date November 27, 2020 SDC is trading above $10.5 per share -  options expire worthlessly and we keep premium - if SDC trades under $10.5 on the expiry date, we get assigned.

But as we already have collected a premium of $0.12 per share, our break-even price for this trade then is $10.5-0.12 = $10.38

Selling credit spreads with SDC stock
Selling credit spreads with SDC stock
  • Running Total  36 Trades since April 27, 2020
  • Options income $732