Naked Put on RIOT - Potential income return 15.3% in 29 days

On July 16, 2020, we sold 1 additional naked put on RIOT stock with a strike price at $2 and get for that $0.33 premium (before commissions)

RIOT stands for Riot Blockchain company focused on building, supporting, and operating Blockchain technologies.

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 #17 in the month of July, and if we stick with our trading plan for this month, premium generated from this trade makes us about 4.37% from our $700 monthly goal, while in total we have already reached 46.20% from our monthly goal so far in July. Amazing. 

Last but not least, as we are trading on margin, we have a negative cash balance, before this trade, our USD cash balance was -$3,165, after it is-$3,135. This small trade closed gives us about a 0.97% boost. Lovely

Here is our trade setup:

  • SLD 1 RIOT AUG 14 '20 2 Put Option  0.33 USD

What can happen next?

RIOT is trading above our strike price of $2 at the expiry date (August 14, 2020), in such a scenario, we keep the premium. Our max gain is already realized: $30.6, or 15.3% potential income in 29 days if the option contract expires worthless. 

In case RIOT is trading below our strike price of $2 we will get assigned 100 shares of RIOT at the strike price $2 per share, in such case we will sell covered calls to lower our cost basis.

Our break-even price: $1.7

Selling naked puts with RIOT stock
Selling naked puts with RIOT stock
  • Running Total  1 Trade since July 15, 2020
  • Options income: $44

We now have two options contracts with RIOT expiring in the next 29 days. Depending on the results (if expires worthless), we might double up and sell 4-5 contracts in the future.