Sold 2 Put Options on NKLA – 1.23% potential income return in 2 days

On November 03, 2021, I sold 2 put options on NKLA stock with an expiry set in the next 2 days. For this trade, I got a premium of $27.2 (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.

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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

This trade comes as the #5 in the month of November, according to my trading plan for this month, the premium generated from this trade makes me about 3.62% of my $750 monthly goal.  While in total I have reached already 1.94% so far. Awesome!

Here is the trade setup:

  • SLD 2 NKLA NOV 05 '21 11 Put Option 0.16 USD

For this trade, I got a premium of 27.2USD (after commissions) or a 1.23% potential income return in 2 days, if options expire worthlessly

What happens next?

On the expiry date, November 05, 2021, NKLA is trading above $11 per share -  options expire worthlessly and I keep premium - if NKLA trades under $11 on the expiry date, I risk getting  assigned 200 shares and buying them for $2,200

But as I already have collected a premium of $0.13 per share, my break-even price for this trade then is $11-$0.13 = $10.87

P.S. There is an earnings report planned for NKLA on November 04, 2021, which I forget to check when constructing this trade. As I'm trading here put option and not a credit spread I feel actually 10% worried about this trade.