Credit Spread on CRBP – 5.7% potential return in 22 days

Credit Spread on CRBP – 5.7% potential return in 22 days

On August 27, 2020, we sold a bull put credit spread on CRBP stock with options expiry set in the next 30 days.

CRBP - Corbus Pharmaceuticals Holdings, Inc. is a Phase 3 clinical-stage pharmaceutical company focused on the development and commercialization of novel therapeutics to treat inflammatory and fibrotic diseases by leveraging its pipeline of rationally designed, endocannabinoid system-targeting drug candidates

Pharma and Biotech stocks have some juicy premiums, thats one of the reasons we like them.

Here is our trade setup:

  • BOT 1 CRBP SEP 18 '20 - 6 + 5 Put Bull Spread -0.39 USD

For this trade, we got a premium of 34.20 USD (after commissions) or 5.7% potential income return in 22 days.

These trades come as the #54 and #55 in the month of August, and if we stick with our trading plan for this month, the premium generated from this trade makes us about 4.56% from our $750 monthly goal, while in total we have already reached 120.45% from our monthly goal so far.

What happens next?

On the expiry date (September 18, 2020) CRBP is trading above $6 per share - options expire worthlessly and we keep premium - if CRBP trades under $5 on the expiry date, we get assigned.

But as we already have collected a premium of 0.32 per share, our break-even price for this trade then is $6-$0.34 = $5.66

In other words, CRBP can fall from the current price of $8.65 down to $5.66 and we will still be break-even

Selling Credit Spreads with CRBP stock

Selling Credit Spreads with CRBP stock

  • Running Total 2 Trades since August 27, 2020

  • Options income: $34

kaupeens Thu, 08/27/2020 - 11:02