Sold 1 Put Option on NYSE:HPQ – 1.66% potential income return in 3 days

On August 24, 2021, I sold 1 put option on NYSE:HPQ stock with an expiry set in the next 3 days. For this trade, I got a premium of $46.6 (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 #27 in the month of August, according to my trading plan for this month, the premium generated from this trade makes me about 3.31% of my $1,400 monthly goal.  While in total I have reached already 111.71% so far. Awesome.

Here is the trade setup:

  • SLD 1 HPQ AUG 27 '21 28 Put Option 0.49 USD

For this trade, I got a premium of 46.6 USD (after commissions) or a 1.66% potential income return in 3 days, if options expire worthlessly

YTD stock price is up almost 20%, will see if my strike price $28 was a smart move, as it seems I have missed one important thing - HPQ is going to release an earnings report Thursday, Aug 26… And this might kill my put option.


What happens next?

On the expiry date, August 27, 2021, HPQ is trading above $28 per share -  options expire worthlessly and I keep premium - if HPQ trades under $28 on the expiry date, I will get assigned 100 shares and will have to buy them for $2,800

But as I already have collected a premium of $0.46 per share, my break-even price for this trade then is $28-$0.46 = $27.54

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