Credit Spread on VTRS – 1.17% potential income return in 22 days / 19.41% annualized

On November 19, 2020, we sold a bull put credit spread on VTRS stock with an expiry set in the next 29 days. For this trade, we get a premium of $23 (before commissions)

These trades come as the #21 and #22 in the month of November, according to our trading plan for this month, the premium generated from this trade makes us about 4.04% from our $450 monthly goal, while in total we have already reached 95.67% so far.

Viatris Inc. is a U.S.-based global healthcare company formed through the combination of Mylan and Upjohn in November 2020. At the time of the combination, Michael Goettler became CEO of the new company. Following the combination, the company began trading on the NASDAQ using the ticker symbol VTRS.

As we got 10 free shares after the spinoff from the Pfizer stock, we decided to dip our toes with selling credit spreads also on VTRS, currently, there is a plan to acquire at least 100 shares and start selling covered calls, but before that, we are testing the waters with credit spreads.

Here is our trade setup:

  • BOT 1 VTRS DEC 18 '20 - 15.5 + 14.5 Put Bull Spread  -0.23 USD 

For this trade, we got a premium of 18.2 USD (after commissions) or a 1.17% potential income return in 22 days.

What happens next?

On expiry date December 18, 2020 VTRS is trading above $15.5 per share -  options expire worthlessly and we keep premium - if VTRS trades under $15.5 on the expiry date, we get assigned.

But as we already have collected a premium of $0.18 per share, our break-even price for this trade then is $15.5-0.18 = $15.32

Selling credit spreads with VTRS stock
Selling credit spreads with VTRS stock
  • Running Total  2 Trades since November 19, 2020
  • Options income $18