Assigned 100 shares SESN; Established Covered Call; Potential Income return 7.5% in 14 days

On August 13, 2021, I got assigned 100 shares with SESN stock at the price of $4 per share. Luckily this was a part of the credit spread, and I had my protection at $3.

When the stock market opened Monday, August 16, I sold my protection for $1.62

Long story short - SESN was hoping for FDA approval for some of their medicine, but in the end, FDA didn’t approve and the stock price plummeted.

Originally this trade was opened just a few days earlier on August 9, 2021, as a credit spread. 7 credit spreads with expiry still set in September, but apparently, some decided to use his rights and exercised 100 shares. Well, that's how it works.

Covered Calls with Reinis Fischer
Sold 7 Credit Spreads on SESN – 11.80% potential income return in 42 days
On August 09, 2021, I sold 7 bull put credit spreads on SESN stock with an expiry set in the next 42 days (September 17, 2021). For this trade, I got a premium of $330.40 (after commissions) SESEN BIO is a biotech company from Massachusets, US These trades come as the #4 and #5 in the month of August, and according to my…
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Here is the trade setup:

  • BOT 100 SESN Stock 4.00 USD (assigned)

  • SLD 1 SESN SEP 17 '21 3 Put Option 1.62 USD

  • SLD 1 SESN AUG 20 '21 2 Call Option 0.10 USD

here I bought 100 shares for paying $400, as I had protective put, I sold it for $162, and additionally, I sold a covered call with this Friday’s expiry for $10.

What happens next?

On the expiry date, August 20, 2021, SESN is trading under $2 per share -  options expire worthlessly and I keep premium - if SESN trades above $2 on the expiry date, my 100 shares will get called away and I will get $200

When originally setting up the credit spread I already got $0.47 per share, my new break-even price for this trade then is $4-$0.47-$1.60-$0.07 = $1.85