What happens when the market appears to be bullish? Weekly options, using a bull put spread is a good options strategy to put in play. Trading options, especially if you enjoy weekly options, the bull put spread is a superb option strategy to learn. We are looking for either range bound or bullish movement in our stock to actually employ this option spread.
Imagine selling a put option with the strike price out-of-the-money (OTM) and then buying another put option just farther (OTM) to offer protection to the one you sold. As you acquired a put option at a higher strike price, it isn't as dear as the one that you sold and you immediately get a credit. This particular option strategy allows you to get your profit upfront and is very well designed to make use of with weekly options.
As the market trends the way you need it to go, meaning the market is either range bound or rising, the put options expire pointless and you keep the credit as your profit on the trade. If the stock trend is down, then you may break even point is the lower strike price plus the credit you received. This option strategy offers incredible income potential on weekly options if done right. But one's maximum loss is the greatest difference between the strike costs minus the credit received.
The bull put spread is a choice spread that is categorized as a "Credit Spread" because your profit is given up front. What you received up front is your maximum profit. Since a once-a-week option here is best executed on a short term basis, the weekly options offer an opportunity to make a weekly earnings. Not only is this a great chance for revenue, but time decay can and should work for you here. With the near term period of this weekly option play we want the stock to either hardly move or move upward. If this occurs, our weekly option will continue to wear away day by day and work in your favour.
Read more on call options explained too.
Imagine selling a put option with the strike price out-of-the-money (OTM) and then buying another put option just farther (OTM) to offer protection to the one you sold. As you acquired a put option at a higher strike price, it isn't as dear as the one that you sold and you immediately get a credit. This particular option strategy allows you to get your profit upfront and is very well designed to make use of with weekly options.
As the market trends the way you need it to go, meaning the market is either range bound or rising, the put options expire pointless and you keep the credit as your profit on the trade. If the stock trend is down, then you may break even point is the lower strike price plus the credit you received. This option strategy offers incredible income potential on weekly options if done right. But one's maximum loss is the greatest difference between the strike costs minus the credit received.
The bull put spread is a choice spread that is categorized as a "Credit Spread" because your profit is given up front. What you received up front is your maximum profit. Since a once-a-week option here is best executed on a short term basis, the weekly options offer an opportunity to make a weekly earnings. Not only is this a great chance for revenue, but time decay can and should work for you here. With the near term period of this weekly option play we want the stock to either hardly move or move upward. If this occurs, our weekly option will continue to wear away day by day and work in your favour.
Read more on call options explained too.
About the Author:
John Mylant is the chief trader of Weekly Options. 1 trades as good as also he is a good investment coach. With John trading weekly options strategies that are safe, conservative, and allows for fast steady expansion with small culpability. He wants to help traders have got the advantage. Interested in successfully growing your portfolio using options - safely, efficiently, and quickly and trading options in an IRA account? You know where to go.
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