Sold 1 Credit Spread on China FXI ETF – 0.63% potential income return in 22 days

On September 2, 2021, I sold 1 bull put credit spread on FXI ETF with an expiry set in the next 22 days. For this trade, I got a premium of $25.20 (after commissions)

FXI or the iShares China Large-Cap ETF seeks to track the investment results of an index composed of large-capitalization Chinese equities that trade on the Hong Kong Stock Exchange.

These trades come as the #3 and #4 in the month of September, according to my trading plan for this month, the premium generated from this trade makes me about 2.52% of my $1,000 monthly goal.  While in total I have reached already 5.04% so far. Awesome.

FXI is down more than -10% YTD

Time will show, was my idea investing in this China ETF was a smart idea

Here is the trade setup:

  • BOT 1 FXI SEP 24 '21 - 40 + 38 Put Bull Spread -0.30 USD

For this trade, I got a premium of 25.2 USD (after commissions) or a 0.63% potential income return in 22 days, if options expire worthlessly

What happens next?

On the expiry date, September 24, 2021, FXI is trading above $40 per share -  options expire worthlessly and I keep premium - if FXI trades under $40 on the expiry date, I will get assigned 100 shares and will have to buy them for $4,000

But as I already have collected a premium of $0.25 per share, my break-even price for this trade then is $40-$0.25 = $39.75

In case of assignment, I will turn this trade into a wheel strategy and will start selling covered calls.