Sold 1 Credit Spread on SPCE – 2.27% potential income return in 45 days

On August 31, 2021, I sold 1 bull put credit spread on SPCE stock with an expiry set in the next 45 days. For this trade, I got a premium of $51.20 (after commissions)

Virgin Galactic is an American spaceflight company founded by Richard Branson and his British Virgin Group retains an 18% stake through Virgin Investments Limited. It is headquartered in California, USA, and operates from New Mexico

These trades come as the #36 and #37 in the month of August, according to my trading plan for this month, the premium generated from this trade makes me about 3.65% of my $1,400 monthly goal.  While in total I have reached already 104.94% so far. Awesome.

Here is the trade setup:

  • BOT 1 SPCE OCT 15 '21 - 22.5 + 20 Put Bull Spread -0.56 USD

For this trade, I got a premium of 51.2 USD (after commissions) or a 2.27% potential income return in 45 days, if options expire worthlessly

What happens next?

On the expiry date, October 15, 2021, SPCE is trading above $22.5 per share -  options expire worthlessly and I keep premium - if SPCE trades under $22.5 on the expiry date, I will get assigned 100 shares and will have to buy them for $2,250

But as I already have collected a premium of $0.51 per share, my break-even price for this trade then is $22.5-$0.51 = $21.99

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