Sold 1 Credit Spread on HOG – 0.7% potential income return in 2 days

On March 10, 2021, we sold 1 bull put credit spread on HOG stock with an expiry set in the next 2 days. For this trade, we got a $30 premium (before commissions)

These trades come as the #75 and #76 in the month of March, according to our trading plan for this month, the premium generated from this trade makes us about 1.26% from our $2,000 monthly goal.  While in total we have reached already 142.99% so far. Awesome.

Harley-Davidson, Inc., H-D, or Harley, is an American motorcycle manufacturer founded in 1903 in Milwaukee, Wisconsin. Along with Indian, it was one of two major American motorcycle manufacturers to survive the Great Depression.

Here is our trade setup:

  • BOT 1 HOG MAR 12 '21 - 36 + 35 Put Bull Spread  -0.30  USD  

For this trade, we got a premium of 25.2 USD (after commissions) or 0.7% potential income return in 2 days (if options expire worthlessly)

What happens next?

On the expiry date (March 12, 2021) HOG is trading above $36 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If HOG trades under $36 on the expiry date, we get assigned.

But as we already have collected a premium of $0.25 per share, our break-even price for this trade then is $36-$0.25= $35.75

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $35, our second bought put will work as insurance and will minimize our potential losses.

In case of assignment, we are ready to spend $3,600 to buy 100 shares with HOG stock

Selling credit spreads with HOG stock
Selling credit spreads with HOG stock
  • Running Total  2 Trades since March 10, 2021

  • Options income: $25