Sold 2 Put Options on SDC – 5.32% potential income return in 21 days

On September 03, 2021, I sold 2 put options on SDC stock with an expiry set in the next 21 days. For this trade, I got a premium of $53.2 (after commissions)

SmileDirectClub is a teledentistry company. The company was co-founded in 2014 by Jordan Katzman and Alex Fenkell. It is based in Nashville, Tennessee

This trade comes as #6 in the month of September, according to my trading plan for this month, the premium generated from this trade makes me about 5.32% of my $1,000 monthly goal.  While in total I have reached already 15.68% so far. Awesome.

Here is the trade setup:

  • SLD 2 SDC SEP 24 '21 5 Put Option 0.29 USD

For this trade, I got a premium of 53.2USD (after commissions) or a 5.32% potential income return in 21 days, if options expire worthlessly

What happens next?

On the expiry date, September 24, 2021, SDC is trading above $5 per share -  options expire worthlessly and I keep premium - if SDC trades under $5 on the expiry date, I will get assigned 200 shares and will have to buy them for $1,000

But as I already have collected a premium of $0.26 per share, my break-even price for this trade then is $5-$0.26 = $4.74

In case of an assignment, I will start selling covered calls to lower my cost basis and collect the dividend during the ride.