Sold 1 Put Option on BP Stock – 0.18% potential income return in 7 days
On April 19, 2024, I sold 1 put option on British Petroleum stock (NYSE: BP) with strike price $37 and expiry next Friday on April 26, 2024. For this trade setup, I was rewarded with $0.07 (after commissions).
Also, I bought 1 share with British Petroleum stock for our long-term dividend stock portfolio, currently, we are holding our first share, with an average buy price of $38.67 per share. BP is a dividend-paying stock and at the moment generates about $1.46 yearly dividend for our stock portfolio. Not much, but every cent counts
My plan is to acquire 1 BP share every week until we reach 100 shares and will start selling covered calls. Meanwhile, selling puts and dollar cost averaging.
99 shares to go.
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 BP APR 26'24 88 PUT 0.09
What happens next?
On the expiry date, April 26, 2024, BP is trading above $37 per share - options expire worthlessly and I keep premium - if BP trades under $37 on the expiry date, I risk getting assigned 100 shares and will have to buy them paying $3,700
But as I already have collected a premium of $0.07 per share, since April 19, 2024 my break-even price for this trade is $37-$0.07= $36.93
In case of an assignment, I will turn this trade into a wheel strategy and will start selling covered calls, while collecting dividend.
Anyhow, if troubled with the strike price near the expiry, I will try to roll it forward and down, preferably for credit, before actually taking the stock assignment
In total: 2 trades since April 19, 2024
Options premium: $7
Shares 1 / Average buy price: $38.28
Gain / loss on shares:+$0.24
Total Gain: +$7.33
Target price before selling: $50