On September 16, 2020, we sold a bull put credit spread on SRNE stock with an expiry set in the next 30 days (October 16). For this trade, we got a $39 premium (before commissions)
SRNE is another biotech stock in our options trading portfolio.
Sorrento Therapeutics, Inc. is a biopharmaceutical company. The Company researches human therapeutic antibodies for the treatment of cancer, inflammation, metabolic, and infectious diseases.
Here is our trade setup:
BOT 1 SRNE OCT 16 '20 - 6 + 5 Put Bull Spread -0.39 USD
For this trade, we got a premium of $34.20 (after commissions) or a 5.7% potential income return in the next 30 days.
These trades come as the #19 and #20 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 4.27% from our $800 monthly goal, while in total we have already reached 36,6% this month
What happens next?
On the expiry date (October 16. 2020) SRNE is trading above $6 per share - options expire worthlessly and we keep premium, realizing our max potential from this trade- if SRNE trades under $6 on the expiry date, we get assigned.
But as we already have collected a premium of $34.2 per share, our break-even price for this trade then is $6-$0.34= $5.66
As we are selling credit spread, we are trading with protection, in case the stock will drop under $5, our second bought put will work as insurance and will minimize our potential loses.
Running Total 2 trades since September 16, 2020
Options Income: $34
We are now trading the following biotech stocks: BCRX, VXRT, CRBP, and SRNE
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