On July 28, 2020, we sold 1 naked put on INGA (dutch stock) with a strike price set at EUR 6 and expiry in the next 10 days (August 7, 2020)/ For this trade we get an EUR 0.1 premium (before commissions)
We call these trades naked because we are trading on margin, in case of an assignment we will borrow from broker funds to finance the purchase.
This trade comes as the #35 in the month of July, and if we stick with our trading plan for this month, premium generated from this trade makes us about 1.31% from our $700 monthly goal, while in total we have already reached 106.74% from our monthly goal
As we are already holding one covered call with INGA stock, we actually don't mind to add 100 more shares at the discounted price. We call it a wheel strategy.
Here is the trade setup:
- SLD 1 INGA AUG 7 '20 6 Put Option 0.10 EUR
what can happen next:
INGA is trading above our strike price of EUR 6 at the expiry date (August 7, 2020), in such case, we keep the premium and probably sell more naked puts to generate additional income or we jump to other stock. Our max gain is realized in this situation. EUR 9.21 or 1.53% potential income in 10 days if the option contract expires worthless. Not the biggest addition, but every bit counts.
In case INGA is trading below our strike price of EUR 6, we grt assigned 100 shares of INGA at price EUR 6 per share.
Our break-even: EUR 5.91
- Running Total 12 Trades since May 11, 2020
- Options income: EUR 89