Roll Forward and Down 2 Credit Spreads on AMWL – 0.66% potential income return in 65 days

On March 31, 2021, we bought back 2 bull put credit spreads on AMWL stock, and additionally sold 2 new bull put credit spreads with lower strikes prices and expiry further out (roll forward and down). The aftermath of this trade $23.2 (after commissions)

Originally we opened this trade on March 09: Sold Credit Spread on AMWL – 2.36% potential income return in 10 days, as our strike prices we challenged we decided to roll forward and down. And then we rolled it again on March 18: Roll forward, down and double up 2 Credit Spreads on AMWL – 1.32% potential income return in 38 days and as our strike pirces againt got challenged we decided to further roll down and forward.

These trades come as the #200 and #201 in the month of March, according to our trading plan for this month, the premium generated from this trade makes us about 9.62% from our $2,000 monthly goal.  While in total we have reached already 296.42% so far. Awesome.

Here is our trade setup:

  •  SLD    2    AMWL    APR 16 '21 - 20 + 17.5 Put Bull Spread    -1.70    USD 
  •  BOT    2    AMWL    MAY 21 '21 - 17.5 + 15 Put Bull Spread    -0.99    USD 

The aftermath for this trade, we got a total premium of 23.2 USD (after commissions) or 0.66% potential income return in 65 days (if options expire worthlessly).In other words, we bought some time and lowered our strike price from $20 to $17.5

What happens next?

On the expiry date (May 21, 2021) AMC is trading above $17.5 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If AMWL trades under $17.5 on the expiry date, we get assigned.

But as we already have collected a premium of $0.11 per share, our break-even price for this trade then is $17.5-$0.11= $17.39

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $15, our second bought put will work as insurance and will minimize our potential losses.

In case of assignment, we are ready to spend $3,500 to buy 200 shares with AMWL stock

Selling credit spreads with AMWL stock
Selling credit spreads with AMWL stock
  • Running Total  18 Trades since November 19, 2020
  • Options income $177