Sold 6 Credit Spreads on SOLO – 6.04% potential income return in 37 days

On March 03, 2021, we sold 6 bull put credit spreads on SOLO stock with an expiry set in the next 37 days. For this trade, we got a $210 premium (before commissions)

These trades come as the #23 and #24 in the month of March, according to our trading plan for this month, the premium generated from this trade makes us about 9.06% from our $2,000 monthly goal.  While in total we have reached already 60.53% so far. Awesome.

Here is our trade setup:

  • BOT 6 SOLO APR 09 '21 - 5 + 4 Put Bull Spread  -0.35  USD  

For this trade, we got a premium of 181.2 USD (after commissions) or 6.04% potential income return in 37 days (if options expire worthlessly)

What happens next?

On the expiry date (April 09, 2021) SOLO is trading above $5 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If SOLO trades under $5 on the expiry date, we get assigned.

But as we already have collected a premium of $0.30 per share, our break-even price for this trade then is $5-$0.3= $4.7

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $4, our second bought put will work as insurance and will minimize our potential losses.

In case of assignment, we are ready to spend $3,000 to buy 600 shares with SOLO stock

Selling credit spreads with Solo stock
Selling credit spreads with Solo stock
  • Running Total  31 Trades since November 23, 2020

  • Options income: $3,294