Discover more from Covered Calls with Reinis Fischer
Rolled Forward and Down 1 Put option on ETH – 1.63% potential income return in 19 days (31.31% annualized)
On August 4, 2023, I rolled forward and down 1 put option on Ethereum crypto coin, a position I originally established at the end of July.
I rolled because my strike price of $1,850 was in the money. I didn’t want to take an assignment yet and decided to roll down this position, while still squeezing out some extra juice (premium)
From the premium received, I bought additional 0.00146 ETH itself.
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 ETH AUG 04 '23 1850 Put Option 17.35
SLD 1 ETH AUG 11 '23 1825 Put Option 20.89
Here I bought back 1 ETH August 04, 2023 expiry put option paying $17.35, and sold a new put option with next week’s expiry (August 11, 2023 ) and a lower strike price receiving $20.89 (before commissions)
The aftermath of this trade + $3.54 (before commissions)
What happens next?
On the expiry date, August 11, 2023, ETH is trading above $1,825 per share - options expire worthlessly and I keep premium - if ETH trades under $1,825 on the expiry date, I risk getting assigned 1 ETH, and will have to buy them paying $1,825
As I already have collected a premium of $27.92 per coin , my break-even price for this trade is 1,825-27.92= $1,797.08
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 ETH assignment.
In total: 8 trades since July 23, 2023
Options premium: $27.92