Discover more from Covered Calls with Reinis Fischer
Sold Put Option on INTC – 1.62% potential income return in 80 days
On April 28, 2023, I sold an additional 1 put option on Intel stock with a strike price of $27 and expiry on May 26, 2023.
For this trade setup, I was rewarded with $12 (after commissions), giving about a 1.62% return in 80 days if the put option will expire worthless.
Originally I started this position on March 7, 2023, and I'm looking to wheel it at least for one year. During the road, I'm ready to take assignments and turn this position into a covered call + collect the dividend.
When setting up this trade I was looking for a high probability winning trade and chose my strike price with Delta -0.08, meaning about a 92% chance of expiring worthless.
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.
Here is the trade setup:
SLD 1 INTC May 26 '23 27 Put Option 0.13 USD
For this trade, I got a premium of 12.37 USD (after commissions) or a 1.62% potential income return in 80 days, if options expire worthlessly
What happens next?
On the expiry date, May 26, 2023, INTC is trading above $27 per share - options expire worthlessly and I keep premium - if INTC trades under $27 on the expiry date, I risk getting assigned 100 shares, and will have to buy them paying $2,700
But as I already have collected a premium of $0.17+$0.14+0.12 per share, my break-even price for this trade is $27-$0.17-$0.14-$0.12 = $26.57
In case of an assignment, I will turn this trade into a wheel strategy and will start selling covered calls.
Anyhow, if troubled with the strike price near the expiry, I will try to roll it forward and down, preferably for credit, before actually taking the stock assignment.
In total: 4 trades since March 7, 2023
Options premium: $44