Sold 4 Credit Spreads on SOLO – 5.45% potential income return in 21 days

On February 12, 2021, we sold 4 bull put credit spreads on SOLO stock with an expiry set in the next 21 days. For this trade, we got a $184 premium (before commissions)

These trades come as the #33 and #34 in the month of February, according to our trading plan for this month, the premium generated from this trade makes us about 5,09% from our $3,000 monthly goal.  .While in total we have reached already 80.96% so far. Awesome.

ElectraMeccanica Vehicles Corporation is a Canadian designer and manufacturer of environmentally efficient electric vehicles headquartered in Vancouver, British Columbia. Established in 2015, the company’s flagship vehicle is the purpose-built, single-seat three wheeled Electric Vehicle called the SOLO

Here is our trade setup:

  • BOT 4 SOLO MAR 05 '21 - 7 + 5.5 Put Bull Spread  -0.46  USD  

For this trade, we got a premium of 152.80 USD (after commissions) or 5.45% potential income return in 21 days (if options expire worthlessly)

What happens next?

On the expiry date (March 05, 2021) SOLO is trading above $7 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If SOLO trades under $7 on the expiry date, we get assigned.

But as we already have collected a premium of $0.38 per share, our break-even price for this trade then is $7-$0.38= $6.62

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $5.5, our second bought put will work as insurance and will minimize our potential losses.

In case of assignment, we are ready to spend $2,800 to buy 400 shares with SOLO stock

Selling credit spreads with SOLO stock
Selling credit spreads with SOLO stock
  • Running Total  21 Trades since November 23, 2020

  • Options income: $2,441