Discover more from Covered Calls with Reinis Fischer
Sold 1 Credit Spread on MRO – 3.35% potential income return in 23 days
On September 22, 2021, I sold 1 bull put credit spread on MRO stock with an expiry set in the next 23 days. For this trade, I got a premium of $40.20 (after commissions)
Marathon Oil Corporation is an American company engaged in hydrocarbon exploration incorporated in Ohio and headquartered in the Marathon Oil Tower in Houston, Texas. The company is ranked 534th on the Fortune 500 and 1900th on the Forbes Global 2000.
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 #33 and #34 in the month of September, according to my trading plan for this month, the premium generated from this trade makes me about 4.2% of my $1,000 monthly goal. While in total I have reached already 94.38% so far. Awesome
YTD MRO stock is up by more than 75%.
Here is the trade setup:
SLD 1 MRO OCT 15 '21 12 Put Option 0.52 USD
BOT 1 MRO OCT 15 '21 10 Put Option 0.07 USD
For this credit spread, I got a credit of 40.2 USD (after commissions) or a 3.35% potential income return in 23 days, if options expire worthlessly
What happens next?
On the expiry date, October 15, 2021, MRO is trading above $12 per share - options expire worthlessly and I keep premium - if MRO trades under $12 on the expiry date, I will get assigned 100 shares and will have to buy them for $1,200
But as I already have collected a premium of $0.4 per share, my break-even price for this trade then will be $12-$0.4 = $11.6
In case of assignment, I will turn this trade into a wheel strategy and will start selling covered calls