Discover more from Covered Calls with Reinis Fischer
Sold 1 Credit Spread on AMZN – 0.24% potential income return in 63 days
On September 15th, 2023, I sold 1 bull put spread on Amazon stock with strike prices at $115 and $110 and expiry on November 17th, 2023). For this trade setup, I was rewarded with $27.60 (after commissions).
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 AMZN Nov17'23 115 PUT 0.84
BOT 1 AMZN Nov17'23 110 PUT 0.55
What happens next?
On the expiry date, November 17, 2023, AMZN is trading above $115 per share - options expire worthlessly and I keep premium - if AMZN trades under $115 on the expiry date, I risk getting assigned 100 shares, and will have to buy them paying $11,500
But as I already have collected a premium of $0.27 per share, my break-even price for this trade is $115-$0.27 = $114.73
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: 45 trades since February 6, 2023
Options premium: $700
Stock gains: $993.73