Discover more from Covered Calls with Reinis Fischer
Sold 1 Credit Spread on EWZ Brazil ETF – 0.97% potential income return in 7 days
On September 24, 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 $32.20 (after commissions)
EWZ - or the iShares MSCI Brazil ETF seeks to track the investment results of an index composed of Brazilian equities.
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 #42 and #43 in the month of September, according to my trading plan for this month, the premium generated from this trade makes me about 3.22% of my $1,000 monthly goal. While in total I have reached already 110.46% so far. Awesome
Here is the trade setup:
SLD 1 EWZ OCT 01 '21 33 Put Option 0.46 USD
BOT 1 EWZ OCT 01 '21 31 Put Option 0.09 USD
For this credit spread, I got a credit of 32.2 USD (after commissions) or a 0.97% potential income return in 7 days, if options expire worthlessly
What happens next?
On the expiry date, 0ctober 01, 2021, EWZ is trading above $33 per share - options expire worthlessly and I keep premium - if EWZ trades under $33 on the expiry date, I will get assigned 100 shares and will have to buy them for $3,300
But as I already have collected a premium of $0.32 per share, my break-even price for this trade then will be $33-$0.32 = $32.69
In case of assignment, I will turn this trade into a wheel strategy and will start selling covered calls