Sold 7 Credit Spreads on SOLO – 6.02% potential income return in 25 days

On November 23, 2020, we sold 7 bull put credit spreads on SOLO stock with an expiry set in the next 25 days. For this trade, we got a $350 premium (before commissions)

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

These trades come as the #32 and #33 in the month of November, according to our trading plan for this month, the premium generated from this trade makes us about 70.31% from our $450 monthly goal, while in total we have already reached 239% so far. Awesome.

Here is our trade setup:

  • BOT 7 SOLO DEC 18 '20 - 7.5+ 6 Put Bull Spread  -0.50  USD  

For this trade, we got a premium of 316.40 USD (after commissions) or 6.02% potential income return in 25 days (if options expire worthlessly)

What happens next?

On the expiry date (December 18, 2020) SOLO is trading above $7.5 per share -  options expire worthlessly and we keep premium, realizing our max potential from this trade. If SOLO trades under $7.5 on the expiry date, we get assigned.

But as we already have collected a premium of $0.45 per share, our break-even price for this trade then is $7.5-$0.45= $7.05

As we are selling credit spreads, our max risk is defined, in case the stock will drop below $6, our second bought put will work as insurance and will minimize our potential losses.

In case of assignment, we are ready to spend $5,250 to buy 700 shares with SOLO stock

Selling credit spreads with Solo stock
Selling credit spreads with Solo stock
  • Running Total  2 Trades since November 23, 2020

  • Options income: $316