Naked Put on INGA - Potential income return 2.62% in 21 day

On July 31, 2020, we sold additional 1 naked put on INGA (dutch stock)  with a strike price set at EUR 5.8 and expiry in the next 21 days (August 21, 2020)/ For this trade we get a EUR 0.16 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 #40 in the month of July, and if we stick with our trading plan for this month, premium generated from this trade makes us about 2.17% from our $700 monthly goal, while in total we have already reached 116.4% 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 21 '20 5.8 Put Option 0.16 EUR

what can happen next:

INGA is trading above our strike price of EUR 5.8 at the expiry date (August 21, 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 15.21 or 2.62% potential income in 21 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 5.8, we get assigned 100 shares of INGA at price EUR 5.8 per share. 

Our break-even: EUR 5.64

Selling puts and calls with Inga stock
Selling puts and calls with Inga stock
  • Running Total  13 Trades since May 11, 2020
  • Options income: EUR 104