Sold 2 Credit Spreads on CLNE – 6.8% potential income return in 91 day

On September 17, 2021, I sold 2 bull put credit spreads on CLNE stock with an expiry set in the next 91 days on December 17. For this trade, I got a premium of $95.2 (after commissions)

Clean Energy Fuels Corp. provides natural gas as an alternative fuel for vehicle fleets and related fueling solutions, primarily in the United States and Canada

I opened this trade, just shortly before my previous 5 credit spreads on CLNE expired worthless.

These trades come as the #24 and #25 in the month of September, according to my trading plan for this month, the premium generated from this trade makes me about 9.52% of my $1,000 monthly goal.  While in total I have reached already 69.62% so far. Awesome.

This stock is very volatile with the 52-wk high at 19.79 and lows of 2.36… for now, the stock price seems to have stabilized around $7-$8 per share. With such stocks I prefer trading credit spreads - taking juicier premiums but also have some protection

Here is the trade setup:

  • SLD 2 CLNE DEC 17 '21 7 Put Option 0.62 USD

  • BOT 2 CLNE DEC 17 '21 5 Put Option 0.12 USD

For this credit spread, I got a credit of 95.2 USD (after commissions) or a 6.8% potential income return in 91 days, if options expire worthlessly

What happens next?

On the expiry date, December 17, 2021, CLNE is trading above $7 per share -  options expire worthlessly and I keep premium - if CLNE trades under $7 on the expiry date, I will get assigned 200 shares and will have to buy them for $1,400

But as I already have collected a premium of $0.47 per share, my break-even price for this trade then will be $7-$0.47 = $6.43

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