Roll forward 5 Credit Spreads on VXRT – 8.78% potential income return in 93 days

On April 6, 2021, we bought back 5 bull put credit spread options on VXRT stock and additionally sold 5 new bull put credit spreads with expiry further out (roll forward). The aftermath of this trade $285.6 (after commissions)

Originally we opened this trade on February 03: Sold 3 Credit Spreads on VXRT – 11.09% potential income return in 44 days, but as our strike price got challenged on March 12, we roled forward, down and double up (increased contract size), see: Roll forward, down and double up 5 Credit Spreads on VXRT – 8.57% potential income return in 58 days

Now, again with our strike prices in the money, we decided to roll forward for some small credit.

These trades come as the #16 and #17 in the month of April, according to our trading plan for this month, the premium generated from this trade makes us about 11.64% from our $2,800 monthly goal.  While in total we have reached already 21.53% this month so far. Awesome.

Here is our trade setup:

  • SLD    5    VXRT    APR 09 '21 - 6.5 + 5 Put Bull Spread    -0.594    USD    
  • BOT    5    VXRT    MAY 14 '21 - 6.5 + 5 Put Bull Spread    -0.716    USD   

The aftermath for this trade since inception in February total premium of $285,6 (after commissions) or 8.78% potential income return in 93 days (if options expire worthlessly).In other words, we bought some additonal time

What happens next?

On expiry date May 14, 2021 VXRT is trading above $6.5 per share -  options expire worthlessly and we keep premium - if VXRT trades under $6.5 on the expiry date, we get assigned.

But as we already have collected a premium of $0.57 per share, our break-even price for this trade then is $6.5-$0.57 = $5.93

Selling credit spreads with VXRT stock
Selling credit spreads with VXRT stock
  • Running Total 24 trades since September 15, 2020

  • Options Income: $1,144