Sold 1 Put Option on TEVA Stock – 1.86% potential income return in 14 days (48.49% annualized)

On July 21, 2023, I sold 1 put option on TEVA stock (NYSE:TEVA) with a strike price of $8 and expiry on August 4, 2023. For this trade setup, I was rewarded with $14.95 (after commissions).

Teva Pharmaceutical Industries Ltd. is an Israeli multinational pharmaceutical company with headquarters in Tel Aviv, Israel. It specializes primarily in generic drugs, but other business interests include active pharmaceutical ingredients and, to a lesser extent, proprietary pharmaceuticals.

From the premium received, I bought 2 shares of TEVA stock itself for our long-term stock portfolio.

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 TEVA AUG 04 '23 8 Put Option 0.16 USD

What happens next?

On the expiry date, August 4, 2023, TEVA is trading above $8 per share -  options expire worthlessly and I keep premium - if TEVA trades under $8 on the expiry date, I risk getting assigned 100 shares, and will have to buy them paying $800

As I already have collected a premium of $0.14 per share, my break-even price for this trade is $8-$0.14= $7.86

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 July 21, 2023

• Options premium: $15