Sold 4 Credit Spreads on BCRX – 7.8% potential return in 28 days (101.63% annualized)

On September 18, 2020, we sold 4 bull put credit spreads on BCRX stock with an expiry set in the next 28 days. For this trade, we got a $144 premium (before commissions)

BioCryst Pharmaceuticals, Inc. is an American pharmaceutical company headquartered in Durham, North Carolina. The company is a late stage biotech company that focuses on oral drugs for rare and serious diseases. 

We have been selling naked puts, credit spreads, and covered calls on BCRX stocks with great success since April 2020

Here is our trade setup:

  • BOT 4 BCRX OCT 16 '20 - 4 + 3 Put Bull Spread -0.36 USD

For this trade, we got a premium of 124.8USD (after commissions) or a 7.8% potential income return in 28 days.

These trades come as the #25 and #26 in the month of September, according to our trading plan for this month, the premium generated from this trade makes us about 15.6% from our $800 monthly goal, while in total we have already reached 61,2% this month

What happens next?

On the expiry date (October 16, 2020) BCRX is trading above $4 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If BCRX trades under $4 on the expiry date, we get assigned.

But as we already have collected a premium of $0.31per share, our break-even price for this trade then is $4-$0.31= $3.69

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $3, our second bought put will work as insurance and will minimize our potential loses.

  • Running Total 19 Trades since April 30, 2020

  • Options income: $637