Roll forward and down 3 Credit Spreads on AMC - Potential income return 0.26% in 35 days

On March 29, 2021, we bought back 3 bull put credit spread on AMC stock, and additionally sold 3 new bull put credit spreads with lower strikes prices and expiry further out (roll forward and down + increase in size). The aftermath of this trade $7.8 (after commissions).

Originally we opened this trade on March 19: Sold 3 Credit Spreads on AMC – 1.65% potential income return in 13 days, but as our strike price were challenged and not willing to take the assignment we decided to roll forward and down.

These trades come as the #186 and #187 in the month of March, according to our trading plan for this month, the premium generated from this trade makes us about 6.33% from our $2,000 monthly goal.  While in total we have reached already 235.22% so far. Awesome.

Here is our trade setup:

  • SLD    3    AMC    APR 01 '21 - 11 + 10 Put Bull Spread    -0.53   USD 
  • BOT    3    AMC    APR 23 '21 - 10 + 9 Put Bull Spread    -0.463   USD     

The aftermath for this trade 7.8 USD (after commissions) or 0.26% potential income return in 35 days (if options expire worthlessly).In other words, we bought some time and lowered our strike price from $11 to $10

What happens next?

On the expiry date (April 23, 2021) AMC is trading above $10 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If AMC trades under $10 on the expiry date, we get assigned.

As we already have collected a premium of $7.8 per share, our break-even price for this trade then is $10-$0.02= $9.98

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $9, our second bought put will work as insurance and will minimize our potential losses.

Selling credit spreads with AMC stock
Selling credit spreads with AMC stock
  • Running Total 47 Trades since August 3, 2020

  • Options Income: $470