Discover more from Covered Calls with Reinis Fischer
Sold 1 Credit Spread on China FXI ETF – 1.21% potential income return in 22 days
On October 21, 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 $51.20 (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.
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.
These trades come as the #24 and #25 in the month of October, according to my trading plan for this month, the premium generated from this trade makes me about 8.53% of my $600 monthly goal. While in total I have reached already 71.59% so far. Awesome!
Here is the trade setup:
SLD 1 FXI NOV 12 '21 42 Put Option 0.86 USD
BOT 1 FXI NOV 12 '21 40 Put Option 0.30 USD
For this trade, I got a premium of 51.2 USD (after commissions) or a 1.21% potential income return in 22 days, if options expire worthlessly
What happens next?
On the expiry date, November 12, 2021, FXI is trading above $42 per share - options expire worthlessly and I keep premium - if FXI trades under $42 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 $0.51 per share, my break-even price for this trade then is $42-$0.51 = $41.49
In case of assignment, I will turn this trade into a wheel strategy and will start selling covered calls.