Sold 1 Put Option on NYSE:HPQ – 0.75% potential income return in 7 days

On August 27, 2021, I sold 1 put option on NYSE:HPQ stock with an expiry set in the next 7 days. For this trade, I got a premium of $21.6 (after commissions)

HP Inc. provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the United States and internationally. The company operates through three segments: Personal Systems, Printing, and Corporate Investments.

This trade comes as the #33 in the month of August, according to my trading plan for this month, the premium generated from this trade makes me about 1.54% of my $1,400 monthly goal.  While in total I have reached already 120.61% so far. Awesome.

Here is the trade setup:

  • SLD 1 HPQ SEP 03 '21 28.5 Put Option 0.24 USD

For this trade, I got a premium of 21.6 USD (after commissions) or a 0.75% potential income return in 7 days, if options expire worthlessly

What happens next?

On the expiry date, September 03, 2021, HPQ is trading above $28.5 per share -  options expire worthlessly and I keep premium - if HPQ trades under $28.5 on the expiry date, I will get assigned 100 shares and will have to buy them for $2,850

But as I already have collected a premium of $0.21 per share, my break-even price for this trade then is $28.5-$0.21 = $28.29

In case of an assignment, I will start selling covered calls to lower my cost basis and collect the dividend during the ride.