Sold 2 Credit Spreads on FCEL – 6.08% potential income return in 35 days

On January 15, 2021, we sold 2 bull put credit spreads on FCEL stock with an expiry set in the next 35 days. For this trade, we got a $192 premium (before commissions)

These trades come as the #14 and #15 in the month of January, according to our trading plan for this month, the premium generated from this trade makes us about 7.29% from our $2,500 monthly goal.  While in total we have reached already 54.16% so far. Awesome.

FCEL - FuelCell Energy, Inc. is a fuel cell power company. It designs, manufactures, operates and services Direct Fuel Cell power plants that run on natural gas and biogas. As the biggest publicly traded fuel-cell manufacturer in the U.S., the company operates over 50 plants all over the world

Here is our trade setup:

  • BOT 2 FCEL FEB 19 '21 - 15+ 13 Put Bull Spread  -0.96  USD  

For this trade, we got a premium of 192 USD (after commissions) or 6.08% potential income return in 35 days (if options expire worthlessly)

What happens next?

On the expiry date (February 19, 2021) FCEL is trading above $15 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If FCEL trades under $15 on the expiry date, we get assigned.

But as we already have collected a premium of $0.91 per share, our break-even price for this trade then is $15-$0.91= $14.09

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $13, our second bought put will work as insurance and will minimize our potential losses.

Selling covered calls with FCEL
Selling covered calls with FCEL
  • Running Total  8 Trades since September 2, 2020

  • Options income: $350