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Sold 3 Credit Spreads on RIDE – 4.48% potential income return in 42 days
On October 15, 2021, I sold 3 bull put credit spreads on RIDE stock with an expiry set in the next 42 days. For this trade, I got a premium of $60.6 (after commissions)
RIDE - Lordstown Motors Corporation is an American electric vehicle automaker located in Lordstown, Ohio. The company is based out of the Lordstown Assembly plant which previously belonged to General Motors. General Motors has invested US$75 million in Lordstown Motors
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 #15 and $16 in the month of October, according to my trading plan for this month, the premium generated from this trade makes me about 10.1% of my $600 monthly goal. While in total I have reached already 44.3% so far. Awesome!
Here is the trade setup:
BOT 3 RIDE NOV 26 '21 - 4.5 + 3.5 Put Bull Spread -0.25 USD
For this trade, I got a premium of 60.6 USD (after commissions) or a 4.48% potential income return in 42 days, if options expire worthlessly
YTD this stock is down by more than 75%, it might be I’m trying to catch a falling knife here. Will see.
What happens next?
On the expiry date, November 19, 2021, RIDE is trading above $4.5 per share - options expire worthlessly and I keep premium - if RIDE trades under $4.5 on the expiry date, I will get assigned 300 shares and will have to buy them for $1,350
But as I already have collected a premium of $0.2 per share, my break-even price for this trade then is $4.5-$0.2 = $4.3
In case of assignment, I will turn this trade into a wheel strategy and will start selling covered calls.