Sold 5 Credit Spreads on CLNE – 7.17% potential income return in 56 days

On July 23, 2021, I sold 5 bull put credit spreads on CLNE stock with an expiry set in the next 56 days. For this trade, I got a premium of $251 (after commissions)

Clean Energy Fuels Corp. provides natural gas as an alternative fuel for vehicle fleets and related fueling solutions, primarily in the United States and Canad

These trades come as the #5 and #6 in the month of July, according to my trading plan for this month, the premium generated from this trade makes me about 12.55% from my $2,000 monthly goal.  While in total I have reached already 33.65% so far. Awesome.

Here is the trade setup:

  • BOT 5 CLNE SEP 17 '21 - 7 + 5 Put Bull Spread -0.55

For this trade, I got a premium of 251 USD (after commissions) or a 7.17% potential income return in 56 days, if options expire worthlessly

I entered this trade quite aggressively, constructing strike prices near the money, but a bit longer expiry as usual.

What happens next?

On the expiry date, September 17, 2021, CLNE is trading above $7 per share -  options expire worthlessly and I keep premium - if CLNE trades under $7 on the expiry date, I will get assigned 500 shares and will have to buy them for $3,500

But as I already have collected a premium of $0.50 per share, my break-even price for this trade then is $7-$0.5 = $6.5

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

From the premium received I bought 5 shares with INTC stock. This purchase will contribute to my dividend portfolio on average $0.49 a month. Awesome