Sold 3 Naked Puts on BCRX - Potential income return 10.65% in 35 days

On July 17, 2020, we sold 3 naked puts on BCRX stock with expiry in 35 days (August 21) and with a strike price at $4. For these puts we get $0.45 premium (before commissions)

We call these trades naked because we are trading on margin, in case of an assignment we will borrow funds from the broker to finance the purchase. 

This trade comes as the #20 in the month of July, and if we stick with our trading plan for this month, premium generated from this trade makes us about 18.25% from our $700 monthly goal, while in total we have already reached 69.37% from our monthly goal so far.

Here is the trade setup:

  • SLD 3 BCRX AUG 21 '20 4 Put Option 0.45 USD

what can happen next:

BCRX is trading above our strike price of $4 at expiry date (August 21, 2020), in such case, we keep the premium and probably sell more naked puts to generate additional income. Our max gain is realized in this situation. $127.8, or 10.65% potential income in 35 days if the option contract expires worthless.

In case BCRX is trading below our strike price of $4, we get assigned 100 shares of BCRX at price $4 per share. 

Our break-even: $3.58

Selling naked puts with BCRX stock
Selling naked puts with BCRX stock

  • Running Total  11 Trades since April 30, 2020
  • Options income: $383