Trade Adjustment: Roll Forward and Down FXI Put Option +2.29% potential income return in 65 days

On November 23, 2021, I rolled forward and down a put option on the FXI ETF I originally established at the end of October, see: Sold 1 Credit Spread on China FXI ETF – 1.21% potential income return in 22 days

FXI or the iShares China Large-Cap ETF seeks to track the investment results of an index composed of large-capitalization Chinese equities that trade on the Hong Kong Stock Exchange.

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:

  • BOT 1 FXI DEC 03 '21 41.5 Put Option 1.69 USD

  • SLD 1 FXI DEC 23 '21 41 Put Option 1.99 USD

Here I bought back the $41.5 strike put option paying $169 and sold a new put option with a lower strike price ($41) and with an expiry set 21 days later. For this trade, I got $199 (before commissions)

I lowered the strike prices from $41.5 to $41

What happens next?

On the expiry date, December 23, 2021, FXI is trading above $41 per share -  options expire worthlessly and I keep premium - if FXI trades under $41 on the expiry date, I will get assigned 100 shares

New break-even price $41-$0.94 = $40.06

In case of an assignment, I will turn this trade into a wheel strategy and will start selling covered calls on this CHINA ETF