On February 10, 2021, we sold 1 naked put on HUGE stock with a strike price at $2.5 and expiry on February 19. For this trade, we get a $0.30 in premium (before commissions)
This trade comes as #25 in the month of February, according to our trading plan for this month, the premium generated from this trade makes us about 0.92% from our $3,000 monthly goal. .While in total we have reached already 60.42% so far. Awesome.
here is our trade setup:
- SLD 1 HUGE FEB 19 '21 2.5 PUT Option 0.30 USD
What can happen next?
HUGE is trading above our strike price of $2.5 at the expiry date (February 19, 2021), in such a scenario, we keep the premium. Our max gain is already realized: $27.6, or 11.04% potential income in 9 days if the option contract expires worthless.
In case HUGE is trading below our strike price of $2.5 we will get assigned 100 shares of HUGE at the strike price 2.5 per share, in such case we will sell covered calls to lower our cost basis.
Our break-even price: $2.23
- Running Total 3 Trades since February 10, 2021
- Options income $113