Sold 1 Credit Spread on INTC – 0.73% potential income return in 24 days
Sold 1 Credit Spread on INTC – 0.73% potential income return in 24 days
On March 7th, 2023, I sold 1 bull put spread on Intel stock with strike prices at $24 and $22 with expiry on March 31, 2023). For this trade setup, I was rewarded with $17.61 (after commissions).
The bull put spreads is a strategy that “collects option premium and limits risk at the same time.” They profit from both time decay and rising stock prices. A bull put spread is the strategy of choice when the forecast is for neutral to rising prices and there is a desire to limit risk
When setting up this trade I was looking for a high probability winning trade and chose my strike prices for the short put side with Delta less than 0.2.
Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California, in Silicon Valley
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 MAR 31 '23 24 Put Option 0.28 USD
BOT 1 INTC MAR 31 '23 22 Put Option 0.08 USD
For this trade, I got a premium of 17.61 USD (after commissions) or a 0.73% potential income return in 24 days, if options expire worthlessly
What happens next?
On the expiry date, March 31, 2023, INTC is trading above $24 per share - options expire worthlessly and I keep premium - if INTC trades under $24 on the expiry date, I risk getting assigned 100 shares, and will have to buy them paying $2,400
But as I already have collected a premium of $0.17 per share, my break-even price for this trade is $24-$0.17 = $23.83
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: 2 trades since March 7, 2023
Options premium: $18