Sold 2 Bull Put Credit Spreads on NIO Stock – 5.73% potential income return in 15 days (139.41% annualized)

On June 16, 2023, I sold 2 bull put spreads on NIO stock (NYSE:NIO) with strike prices at $9.5 and $8 with expiry on June 23, 2023. For this trade setup, I was rewarded with $43 (after commissions).

Nio Inc. is a Chinese multinational automobile manufacturer headquartered in Shanghai, specializing in designing and developing electric vehicles. The company develops battery-swapping stations for its vehicles, as an alternative to conventional charging stations

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 NIO JUNe 23 '23 9.5 Put Option 0.26 USD

• BOT 1 NIO JUNE 23 '23 8 Put Option 0.03 USD

What happens next?

On the expiry date, June 23, 2023, NIO is trading above $9.5 per share -  options expire worthlessly and I keep premium - if NIO trades under $8 on the expiry date, I risk getting assigned 200 shares, and will have to buy them paying $1,900

In case the stock falls under $8, I have protection.

As I already have collected a premium of $1.09/2 per share, my break-even price for this trade is $9.5-$0.54 = $8.96

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

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: 4 trades since June 8, 2023

• Options premium: $109

• In recovery (from TSLA trade): -$494