Sold 3 Naked Puts on BCRX - Potential income return 11.9% in 28 days

On August 21, 2020, we sold 3 naked puts on BCRX stock with expiry in the next 28 days (September 18) and with a strike price at $4. For these puts, we get $0.50 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 #45 in the month of August, and if we stick with our trading plan for this month, the premium generated from this trade makes us about 19.04% from our $750 monthly goal, while in total we have already reached 103.97% from our monthly goal so far.

Here is the trade setup:

  • SLD 3 BCRX SEP 18 '20 4 Put Option 0.5 USD

what can happen next:

BCRX is trading above our strike price of $4 at expiry date (September 18, 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. $142.8, or 11.9% potential income in 28 days if the option contract expires worthless.

In case BCRX is trading below our strike price of $4, we get assigned 300 shares of BCRX at price $4 per share. 

Our break-even: $3.53

Selling naked puts on BCRX stock
Selling naked puts on BCRX stock
  • Running Total  16 Trades since April 30, 2020
  • Options income: $541