On November 25, 2020, we sold 1 covered put on NYSE:PLTR stock with an expiry set in the next 3 days. For this trade, we get a premium of $100 (before commissions).
This trade comes as the #21 in the month of November, according to our trading plan for this month, the premium generated from this trade makes us about 10% of our $1000 monthly goal, while in total we have already reached 171.24% so far.
PLTR is one of our favorite stocks to trade credit spreads / covered puts on, since April 2020, this stock has made us the most options income so far.
Here is our trade setup:
- STO 1 PLTR NOV 27 ’20 – 24 Put -1.00USD
For this trade, we got a premium of 100USD (after commissions) or a 4.11% potential income return in 3 days.
What happens next?
On expiry date November 27, 2020 PLTR is trading above $24 per share – options expire worthlessly and we keep premium and get our collateral back – if PLTR trades under $24 on the expiry date, we get assigned, and our collateral ($2400) will be used to purchase 100 shares at $2400a share.
But as we already have collected a premium of $1.00 per share, our break-even price for this trade then is $24-1.00= $23 Breakeven
This is also our first step to starting the strategy known as ‘The Wheel’, which is our primary source of passive income.
