Discover more from Covered Calls with Reinis Fischer
Sold 1 Bull Put Credit Spread on Disney – 1.18% potential income return in 30 days
On June 14, 2023, I sold 1 bull put spread on Disney stock (NYSE:DIS) with strike prices at $93 and $88 with expiry on July 14, 2023. For this trade setup, I was rewarded with $109.9 (after commissions).
The Walt Disney Company, commonly known as Disney, is an American multinational, mass media and entertainment conglomerate that is headquartered at the Walt Disney Studios complex in Burbank, California.
From the premium received, I bought 1 share of Disney stock. 99 to go, before I will be able to establish covered call options on this position
When setting up this trade I was looking for more aggressive, near the money, strike prices, as I’m actually ready for the stock assignment at $93.
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 1 DIS JULY 14 '23 93 Put Option 1.66USD
BOT 1 DIS JULY 14 '23 88 Put Option 0.54 USD
What happens next?
On the expiry date, June 14 2023, DIS is trading above $93 per share - options expire worthlessly and I keep premium - if DIS trades under $93 on the expiry date, I risk getting assigned 100 shares, and will have to buy them paying $9,300
But as I already have collected a premium of $1.09 per share, my break-even price for this trade is $93-$1.09 = $91.91
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: 3 trades since June 14, 2023
Options premium: $110