However, if the stock is above $127.50, the final value of the spread would be less than the $2.50 paid, and the trade would have made a loss. We covered the bear put spread in more detail here. 2. Calendar (Horizontal) Spread Strategies Calendar spread is so called because of ...
How does a put option decrease in value? One reason the put's intrinsic value is decreasing would be because the stock is rising toward the strike price. What is a put spread? There are multiple strategies for playing puts, such as buying and selling puts on the same stock at the sa...
Vertical Put Spreads include the most popular Bear Put spread as well as more complex strategies such as the Put Butterfly Spread. Horizontal Put Spreads are Put Spreads that consist of Put Options of the same strike price but different expiration months. Horizontal Put Spreads are usually Put...
The Bull Put Spread is a vertical spread strategy where the investorsells a higher strike price put option, shown as point B, andbuys a lower strike price put option, point A, within the same expiration month. The investor will receive a premium or credit, as the higher strike price put ...
To buy a stock at a lower price: A bull put spread is a good way to buy a desired stock at an effective price that is lower than its current market price. To capitalize on sideways to marginally higher markets: Put writing and bull put spreads are optimal strategies for markets and sto...
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Find Options Strategies With Similar Risk Profiles Types of Put Time SpreadsThere are two main types of Put Time Spreads; The Horizontal Put Time Spread and the Diagonal Put Time Spread. Both Put Time Spreads are differentiated based on the moneyness of the short term put options written. As ...
For option traders, basic spreads are typically created on a ratio of 1:1. A vertical spread has one long option for every short option. A typical straddle or strangle consists of the purchase (or sale) of a call and the purchase (or sale) of an equal number of puts with the same ...
2. Naked Put Option Naked option strategies reflect when the buyer or seller of the option has no offsetting exposure in the underlying stock itself. A naked put option buyer is betting on profits from stock price declines below the exercise price. ...
If you like the risk/reward of the Bear Put Spread strategy but are bullish:Bull Call Debit Spreads Help If you are Bearish on the stock but prefer credit spreads:Bear Call Credit Spreads Help For more information on the Parity Strategy to Bear Put Debit spreads:Parity Trading - Option Spre...