Discover more from Covered Calls with Reinis Fischer
Sold 1 Credit Spread on AMZN – 4% potential income return in 14 days
On April 28, 2023, I sold 1 bull put spread on Amazon stock with strike prices at $96 and $91 with expiry on May 12, 2023). For this trade setup, I was rewarded with $19.96 (after commissions).
When setting up this trade I was looking for a high probability profit trade and chose my strike prices with Delta less than -0.1.
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 MAY 12 '23 96 Put Option 0.37 USD
BOT 1 AMZN MAY 12 '23 91 Put Option 0.14USD
What happens next?
On the expiry date, May 12, 2023, AMZN is trading above $96 per share - options expire worthlessly and I keep premium - if AMZN trades under $96 on the expiry date, I risk getting assigned 100 shares, and will have to buy them paying $9,600
But as I already have collected a premium of $0.20 per share, my break-even price for this trade is $96-$0.2 = $95.8
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: 20 trades since February 6, 2023
Options premium: $227