Rolled forward and down 1 Put on WBA Stock – 31.55% potential income return in 388 days
On January 16, 2024, I rolled forward and down 1 put option on Walgreens Boots Alliance Inc stock (NASDAQ:WBA) buying back strike price of $25 and, and selling new put with strike price $22.5 with expiry on July 19, 2024. For this trade setup, I was rewarded with $0.10 (after commissions).
WBA is one of the rotten tomato in my portfolio. I keep it rolling since September 2023. So far have managed to roll it down from 27.5 to already 22.5
This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.
here is the trade setup:
BOT 1 WBA Jan19'24 25 PUT 2.04
SLD 2 WBA Jul19'24 22.5 PUT 2.16
What happens next?
On the expiry date, July 19, 2024, WBA is trading above 22.5 per share - options expire worthlessly and I keep premium - if WBA trades under $22.5 on the expiry date, I risk getting assigned 100 shares and will have to buy them paying $2,250
As I already have collected a premium of $7.1 per share, my break-even price for this trade is $22.5-$7.1= $15.4
In case of an assignment, I will turn this trade into a wheel strategy and will start selling covered calls.
Anyhow, if troubled with the strike price near the expiry, I will try to roll it forward and down, preferably for credit, before actually taking the stock assignment
In total: 16 trades since June 27, 2023
Options premium: $710