Credit Spread on SmileDirectClub (NASDAQ:SDC) – 3.13% potential income return in 7 days / 162.78% 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 $66 (before commissions)

These trades come as the #14 and #15 in the month of November, according to our trading plan for this month, the premium generated from this trade makes us about 12.53% from our $450 monthly goal, while in total we have already reached 53.61% 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 20 '20 - 9 + 8 Put Bull Spread  -0.33 USD 

For this trade, we got a premium of 56.4 USD (after commissions) or a 3.13% potential income return in 7 days.

What happens next?

On expiry date November 2, 2020 SDC is trading above $9 per share -  options expire worthlessly and we keep premium - if SDC trades under $9 on the expiry date, we get assigned.

But as we already have collected a premium of $0.28 per share, our break-even price for this trade then is $9-0.28 = $8.72

Selling credit spreads on SDC
Selling credit spreads on SDC
  • Running Total  33 Trades since April 27, 2020
  • Options income $677