Credit Spread on AMC – 4.94% potential income return in 31 days (58.14% annualized)

On September 8, 2020, we sold a bull put credit spread on AMC stock with an expiry set in the next 31 days (October 9). For this trade, we got a $32 premium (before commissions)

AMC Entertainment Holdings, Inc. is an American movie theater chain headquartered in Leawood, Kansas, and the largest movie theater chain in the world. Founded in 1920, AMC has the largest share of the U.S. theater market ahead of Regal and Cinemark Theatres

Here at OptionsBrew.com, we have been trading AMC with great success since early August 2020.

Here is our trade setup:

  • BOT 1 AMC OCT 9 '20 - 5.5 + 4.5 Put Bull Spread  -0.32 USD

For this trade, we got a premium of $27.20 (after commissions) or 4.94% potential income return in the next 31 days.

These trades come as the #12 and #13 in the month of September, and if we stick with our trading plan for this month, the premium generated from this trade makes us about 3.4% from our $800 monthly goal, while in total we have already reached 18.12% this month

What happens next?

On the expiry date (October 9. 2020) AMC is trading above $5.5 per share -  options expire worthlessly and we keep premium - if AMC trades under $5.5 on the expiry date, we get assigned.

But as we already have collected a premium of $27.2 per share, our break-even price for this trade then is $ 5.5-$ 0.27= $5.23

  • Running Total 11 Trades since August 3, 2020

  • Options Income: $164