Sold 4 Credit Spreads on RIDE – 4.24% potential income return in 46 days

On November 15, 2021, I sold 4 credit spread bull put options on RIDE stock with an expiry set in the next 46 days on December 31, 2021. For this trade, I got a premium of $84.8 (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.

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

These trades come as the #28 and #29 in the month of November, according to my trading plan for this month, the premium generated from this trade makes me about 11.30% of my $750 monthly goal.  While in total I have reached already 67.2% so far. Awesome!

Here is the trade setup:

  • SLD 4 RIDE DEC 31 '21 5 Put Option 0.46 USD

  • BOT 4 RIDE DEC 31 '21 4 Put Option 0.20 USD

For this trade, I got a premium of 84.8 USD (after commissions) or a 4.24% potential income return in 46 days, if options expire worthlessly

What happens next?

On the expiry date, December 31, 2021, RIDE is trading above $5 per share -  options expire worthlessly and I keep premium - if RIDE trades under $5 on the expiry date, I risk getting  assigned 400 shares and buying them for $2,000

But as I already have collected a premium of $0.21 per share, my break-even price for this trade then is $5-$0.21 = $4.79

In case of an assignment, I will turn this trade into a wheel, but prior to the assignment I will try to roll out this trade