Roll Forward and Down 9 Credit Spreads on VXRT – 16.20% potential income return in 228 days

On March 30, 2021, we bought back 5 bull put credit spreads on VXRT stock, and additionally sold 9 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 $1,093.8 (after commissions)

Originally we opened this trade on February 1: Sold 4 Credit Spreads on VXRT – 8.47% potential income return in 32 days, but as our strike prices got challenged, we decided to avoid assignment by rolling this trade forward and lowering our strike prices: Roll Forward and Down 4+1 Credit Spreads on VXRT – 12.85% potential income return in 71 days, as our strike prices were challenged again, we decided to roll further our.

These trades come as the #192 and #193 in the month of March, according to our trading plan for this month, the premium generated from this trade makes us about 78.84% from our $2,000 monthly goal.  While in total we have reached already 297.78% so far. Awesome.

Vaxart, Inc. is an American biotechnology company focused on the discovery, development, and commercialization of oral recombinant vaccines administered using temperature-stable tablets that can be stored and shipped without refrigeration, eliminating the need for needle injection.

Here is our trade setup:

  • SLD   5   VXRT    APR 09 '21 - 9 + 6 Put Bull Spread   -2.84  USD    
  • BOT   9   VXRT    OCT 15 '21 - 7.5 + 5 Put Bull Spread    -1.813  USD 

The aftermath for this trade, we got a total premium of 1,093.80 USD (after commissions) or 16.20% potential income return in 228 days (if options expire worthlessly).In other words, we bought some time and lowered our strike price from $9 to $7.5

What happens next?

On the expiry date (October 15, 2021) VXRT is trading above $7.5 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If VXRT trades under $7.5 on the expiry date, we get assigned.

But as we already have collected a premium of $1.21 per share, our break-even price for this trade then is $7.5-$1.21= $6.29

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $5, our second bought put will work as insurance and will minimize our potential losses.

In case of assignment, we are ready to spend $6,750 to buy 900 shares with VXRT stock

Selling credit spreads with VXRT stock
Selling credit spreads with VXRT stock
  • Running Total 20 trades since September 15, 2020

  • Options Income: $1,137