Sold 2 Credit Spreads on SPCE – 1.95% potential income return in 15 days
On December 08, 2021, I sold 2 bull put credit spreads on SPCE stock with an expiry set in the next 15 days. For this trade, I got a premium of $62.4 (after commissions)
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Here is the trade setup:
BOT 2 SPCE DEC 23 '21 - 16 + 15 Put Bull Spread -0.36 USD
For this trade, I got a premium of 62.4 USD (after commissions) or a 1.95% potential income return in 15 days, if options expire worthlessly
What happens next?
On the expiry date, December 23, 2021, SPCE is trading above $16 per share - options expire worthlessly and I keep premium - if SPCE trades under $16 on the expiry date, I risk getting assigned 200 shares and will have to buy them for $3,200
But as I already have collected a premium of $0.31 per share, my break-even price for this trade then is $16-$0.31 = $15.69
In case of assignment, I will turn this trade into a wheel strategy and will start selling covered calls.