Discover more from Covered Calls with Reinis Fischer
Sold 0.6 Put Options on ETH – 0.96% potential income return in 5 days (70.08% annualized)
On July 23, 2023, I sold 0.6 put options on ETH crypto coin with a strike price of $1,875 and expiry on July 28, 2023. For this trade setup, I was rewarded with $10.82 (after commissions).
Selling crypto options is pretty much the same as selling stock options, except they are settled in crypto, require less capital, and are settled European style (cannot be assigned before the expiry).
Ethereum is a decentralized blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Among cryptocurrencies, ether is second only to bitcoin in market capitalization. It is open-source software. Ethereum was conceived in 2013 by programmer Vitalik Buterin.
From the premium received, I bought 0.00588 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:
SLD 0.6 ETH JUL 28 '23 1875 Put Option 18.6 USD
What happens next?
On the expiry date, July 28, 2023, ETH is trading above $1,875 per share - options expire worthlessly and I keep premium - if ETH trades under $1,875 on the expiry date, I risk getting assigned 0.6 ETH, and will have to buy them paying $1,125
As I already have collected a premium of $18 per coin, my break-even price for this trade is $1,875-$18= $1,857
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 a credit, before actually taking the ETH assignment.
In total: 2 trades since July 23, 2023
Options premium: $11.16