Sold 5 Credit Spreads on FCEL – 4.99% potential income return in 18 days

On July 19, 2021, I sold 5 bull put credit spreads on FCEL stock with an expiry set in the next 18 days. For this trade, I got a premium of $181 (after commissions)

FuelCell Energy, Inc. is an American fuel cell power company. It designs, manufactures, operates, and services Direct Fuel Cell power plants that run on natural gas and biogas.

These trades come as the #1 and #2 in the month of July, according to my trading plan for this month, the premium generated from this trade makes me about 9.05% from my $2,000 monthly goal.  While in total I have reached already 9.05% so far. Awesome.

Here is the trade setup:

  • BOT 5 FCEL AUG 06 '21 - 6.5 + 5 Put Bull Spread -0.41

For this trade, I got a premium of 181 USD (after commissions) or a 4.99% potential income return in 18 days, if options expire worthlessly

I entered this trade bit aggressively, constructing strike prices near the money

What happens next?

On the expiry date, August 06, 2021, FCEL is trading above $6.5 per share -  options expire worthlessly and I keep premium - if FCEL trades under $6.5 on the expiry date, I will get assigned 500 shares

But as I already have collected a premium of $0.36 per share, my break-even price for this trade then is $6.5-$0.36 = $6.14

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

From the premium received bought 5 shares with Pfizer (PFE) stock. This will contribute to my dividend portfolio and once 100 shares will be reached - will start selling covered calls on Pfizer