Trade Alert: Rolled WBA Credit Spread to Put Option - 1.42% potential income in 57 days

On October 22, 2021, I rolled a WBA credit spread into a put option.

Originally I entered this trade back at the start of September as a credit spread, see: Sold 1 Credit Spread on WBA – 0.92% potential income return in 43 days

Walgreens Boots Alliance, Inc. is a holding company headquartered in Deerfield, Illinois that owns the retail pharmacy chains Walgreens and Boots, as well as several pharmaceutical manufacturing, wholesale, and distribution companies

Here is the trade setup:

  • BOT 1 WBA OCT 22 '21 49 Put Option 0.28 USD

  • SLD 1 WBA NOV 05 '21 48 Put Option 0.56 USD

Here I bought back the $49 put option with today’s expiry paying $169 and sold a new put option with a lower strike price but with an expiry in the next two weeks. For this trade, I got $28 (before commissions).

What happens next?

On the expiry date, November 05, 2021, WBA is trading above $48 per share -  options expire worthlessly and I keep premium - if WBA trades under $48 on the expiry date, I risk getting assigned 100 shares. Will try to roll out / roll down. But ready to take an assignment and start selling covered calls.

New break-even price $48-$0.68 = $47.32