Roll Forward and Down 3 Credit Spreads on FUV – 4.24% potential income return in 217 days

On March 30, 2021, we bought back 2 bull put credit spreads on FUV 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 $127.4 (after commissions)

Originally we opened this trade on March 12: Sold 2 Credit Spreads on FUV – 3.48% potential return in 35 days, but as our strike prices got challenged, we decided to avoid assignment by rolling this trade forward and lowering our strike prices

These trades come as the #196 and #197 in the month of March, according to our trading plan for this month, the premium generated from this trade makes us about 17.13% from our $2,000 monthly goal.  While in total we have reached already 303.69% so far. Awesome.

Arcimoto is an electric vehicle company headquartered in Eugene, Oregon that manufactures and sells the Fun Utility Vehicle, or FUV, a tandem two-seat, three-wheeled electric vehicle. They also sell van-variations on the design "Rapid Responder" for emergency services, and "Deliverator" for last-mile deliveries.

Here is our trade setup:

  • SLD    2    FUV    APR 16 '21 - 15 + 12.5 Put Bull Spread    -1.55   USD
      
  • BOT    3    FUV    OCT 15 '21 - 10 + 7.5 Put Bull Spread    -1.203    USD 

The aftermath for this trade, we got a total premium of 127.4 USD (after commissions) or 4.24% potential income return in 217 days (if options expire worthlessly).In other words, we bought some time and lowered our strike price from $15 to $10

What happens next?

On the expiry date (October 15, 2021) FUV is trading above $10 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If VXRT trades under $10 on the expiry date, we get assigned.

But as we already have collected a premium of $0.42 per share, our break-even price for this trade then is $10-$0.42= $9.58

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $7.5, our second bought put will work as insurance and will minimize our potential losses.

In case of assignment, we are ready to spend 3,000 to buy 300 shares with FUV stock

Selling credit spreads with FUV stock
Selling credit spreads with FUV stock
  • Running Total  10 Trades since December 9, 2020

  • Options income: $298