On September 20, 2021, I sold 1 bull put credit spread on EWZ ETF with an expiry set in the next 4 days. For this trade, I got a premium of $41.20 (after commissions)
EWZ - or the iShares MSCI Brazil ETF seeks to track the investment results of an index composed of Brazilian equities.
These trades come as the #29 and #30 in the month of September, according to my trading plan for this month, the premium generated from this trade makes me about 4.21% of my $1,000 monthly goal. While in total I have reached already 85.98% so far. Awesome.
Here is the trade setup:
SLD 1 EWZ SEP 24 '21 32 Put Option 0.57 USD
BOT 1 EWZ SEP 24 '21 30 Put Option 0.11 USD
For this credit spread, I got a credit of 41.2 USD (after commissions) or a 1.28% potential income return in 4 days, if options expire worthlessly
What happens next?
On the expiry date, September 24, 2021, EWZ is trading above $32 per share - options expire worthlessly and I keep premium - if EWZ trades under $32 on the expiry date, I will get assigned 100 shares and will have to buy them for $3,200
But as I already have collected a premium of $0.41 per share, my break-even price for this trade then will be $32-$0.41 = $31.59
In case of assignment, I will turn this trade into a wheel strategy and will start selling covered calls