On December 21, 2020, we sold 3 bull put credit spreads on FCEL stock with an expiry set in the next 25 days. For this trade, we got a $114 premium (before commissions)
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
These trades come as the #37 and #38 in the month of December, according to our trading plan for this month, the premium generated from this trade makes us about 9.05% from our $1,100 monthly goal. While in total we have reached already 180.90% so far. Awesome.
Here is our trade setup:
BOT 3 FCEL JAN 15 '21 - 8+ 7 Put Bull Spread -0.38 USD
For this trade, we got a premium of 99.60 USD (after commissions) or 4.15% potential income return in 25 days (if options expire worthlessly)
What happens next?
On the expiry date (January 15, 2021) FCEL is trading above $8 per share - options expire worthlessly and we keep premium, realizing our max potential from this trade. If FCEL trades under $8 on the expiry date, we get assigned.
But as we already have collected a premium of $0.33 per share, our break-even price for this trade then is $8-$0.33= $7.67
As we are selling credit spreads, our max risk is defined, in case the stock will drop below $7, our second bought put will work as insurance and will minimize our potential losses.
Running Total 6 Trades since September 2, 2020
Options income: $167