Sold 2 Credit Spreads on NKLA – 2.93% potential income return in 24 days

On November 09, 2021, I sold 2 credit spread bull put options on NKLA stock with an expiry set in the next 24 days on December 17, 2021. For this trade, I got a premium of $70.4 (after commissions)

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.

Nikola Corporation is an American company that has presented a number of zero-emission vehicle concepts since 2016. The company has stated on several occasions that it intends to take some of its concept vehicles into production in the future. Nikola Corporation is based in Phoenix, Arizona

These trades come as the #16 and #17 in the month of November, according to my trading plan for this month, the premium generated from this trade makes me about 9.38% of my $750 monthly goal.  While in total I have reached already 34.37% so far. Awesome!

Here is the trade setup:

  • SLD 2 NKLA DEC 03 '21 12 Put Option 0.62 USD

  • BOT 2 NKLA DEC 03 '21 10 Put Option 0.22 USD

For this trade, I got a premium of 70.4 USD (after commissions) or a 2.93% potential income return in 24 days, if options expire worthlessly

What happens next?

On the expiry date, December 03, 2021, NKLA is trading above $12 per share -  options expire worthlessly and I keep premium - if NKLA trades under $12 on the expiry date, I risk getting  assigned 200 shares and buying them for $2,400

But as I already have collected a premium of $0.35 per share, my break-even price for this trade then is $12-$0.35 = $11.65

In case of an assignment, I will turn this trade into a wheel, but prior to the assignment I will try to roll out this trade