Credit Spread on SRNE – 5.7% potential income return in 30 days (71.82% annualized)

Fun with Biotech

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.

Sorrento Therapeutics Is a Scary, Risky Potential Buy

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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