Sold 1 Credit Spread on KO – 0.87% potential income return in 36 days

On September 23, 2021, I sold 1 bull put credit spread on KO stock with an expiry set in the next 36 days. For this trade, I got a premium of $47.20 (after commissions)

The Coca-Cola Company is an American multinational beverage corporation incorporated under Delaware's General Corporation Law and headquartered in Atlanta, Georgia.

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 #35 and #36 in the month of September, according to my trading plan for this month, the premium generated from this trade makes me about 4.72% of my $1,000 monthly goal.  While in total I have reached already 99.1% so far. Awesome

Here is the trade setup:

  • SLD 1 KO OCT 29 '21 54 Put Option 0.94 USD

  • BOT 1 KO OCT 29 '21 52 Put Option 0.42 USD

For this credit spread, I got a credit of 47.2 USD (after commissions) or a 0.87% potential income return in 36 days, if options expire worthlessly

What happens next?

On the expiry date, October 29, 2021, KO is trading above $54 per share -  options expire worthlessly and I keep premium - if KO trades under $54 on the expiry date, I will get assigned 100 shares and will have to buy them for $5,400

But as I already have collected a premium of $0.47 per share, my break-even price for this trade then will be $54-$0.47 = $53.53

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