Covered Calls with Reinis Fischer

Share this post
Sold 1 Put Bull Ratio Back Spread on WBA
coveredcalls.reinisfischer.com

Sold 1 Put Bull Ratio Back Spread on WBA

Reinis Fischer
Dec 4, 2021
Share this post
Sold 1 Put Bull Ratio Back Spread on WBA
coveredcalls.reinisfischer.com

On December 03, 2021, I sold 1 bull put ratio back spread option on WBA stock with an expiry set in the next 42 days on January 15, 2022. For this trade, I paid a debit of $118.2 (after commissions)

As I'm actually holding 81 shares with WBA inc stock - I decided to establish this ratio back spread as protection from further drop and also to free up some margin.

The Put Ratio Back Spread is a 3 leg option strategy as it involves buying two OTM Put options and selling one ITM Put option. This is the classic 2:1 combo.

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.

Here is the trade setup:

  • SLD 1 WBA JAN 14 '22 44 Put Option 1.89 USD

  • BOT 2 WBA JAN 14 '22 43 Put Option 1.50 USD

For this trade, I paid a debit of 118.2 USD (after commissions) or a 2.68% premium, if options expire worthlessly

What happens next?

On the expiry date, January 14, 2022, WBA is trading above $44 per share -  options expire worthlessly and I lose the premium I paid - if WBA trades under $44 on the expiry date, I risk getting  assigned 100 shares and buying them for $4,400

In case WBA will drop below our second bought strike prices at $43, we will earn additional income. The more it will drop, the more we will earn.

In case of an assignment, I will turn this trade into a wheel, but prior to the assignment I will try to roll out this trade

Break-Even: $41.82

Share this post
Sold 1 Put Bull Ratio Back Spread on WBA
coveredcalls.reinisfischer.com
Comments

Create your profile

0 subscriptions will be displayed on your profile (edit)

Skip for now

Only paid subscribers can comment on this post

Already a paid subscriber? Sign in

Check your email

For your security, we need to re-authenticate you.

Click the link we sent to , or click here to sign in.

TopNewCommunity

No posts

Ready for more?

© 2022 Reinis Fischer
Privacy ∙ Terms ∙ Collection notice
Publish on Substack Get the app
Substack is the home for great writing