Sold 3 Credit Spreads on CLOV – 4.74% potential income return in 42 days

On September 24, 2021, I sold 3 bull put credit spreads on CLOV stock with an expiry set in the next 42 days (November 05, 2021). For this trade, I got a premium of $99.6 (after commissions)

Clover Health Investments Corp. provides healthcare insurance services. It uses its proprietary technology platform to collect, structure, and analyze health and behavioral data to improve medical outcomes and lower costs for patients. The company was founded in 2014 and is headquartered in Franklin, TN.

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.

These trades come as the #40 and #41 in the month of September, according to my trading plan for this month, the premium generated from this trade makes me about 9.96% of my $1,000 monthly goal.  While in total I have reached already 107.24% so far. Awesome

Here is the trade setup:

  • SLD 1 CLOV NOV 05 '21 7 Put Option 0.49 USD

  • BOT 1 CLOV NOV 05 '21 5.5 Put Option 0.11 USD

For this credit spread, I got a credit of 99.6 USD (after commissions) or a 4.74% potential income return in 42 days, if options expire worthlessly

What happens next?

On the expiry date, November 05, 2021, CLOV is trading above $7 per share -  options expire worthlessly and I keep premium - if CLOV trades under $7 on the expiry date, I will get assigned 100 shares and will have to buy them for $2,100

But as I already have collected a premium of $0.33 per share, my break-even price for this trade then will be $7-$0.33 = $6.67

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