Sold 3 Credit Spreads on ACB – 7.28% potential income return in 30 days

On January 27, 2021, we sold 3 bull put credit spreads on ACB stock with an expiry set in the next 30 days. For this trade, we got a $222 premium (before commissions)

These trades come as the #44 and #45 in the month of January, according to our trading plan for this month, the premium generated from this trade makes us about 8.30% from our $2,500 monthly goal.  While in total we have reached already 119.78% so far. Awesome.

Here is our trade setup:

  • BOT 3 ACB FEB 26 '21 - 9.5 + 7.5 Put Bull Spread  -0.74  USD  

For this trade, we got a premium of 207.60 USD (after commissions) or a 7.28% potential income return in 30 days (if options expire worthlessly)

What happens next?

On the expiry date (February 26, 2021) ACB is trading above $9.5 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If ACB trades under $9.5 on the expiry date, we get assigned.

But as we already have collected a premium of $0.69 per share, our break-even price for this trade then is $9.5-$0.69= $8.82

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 $2,850 to buy 300 shares with ACB stock

Selling credit spreads with ACB stock
Selling credit spreads with ACB stock
  • Running Total  2 Trades since January 27, 2021

  • Options income: $208