Re Bull Put Spread: What would be the downside to buying a lower strike ie. the$45 put in the bull put spread? Seems like it would yield a larger Net Credit. ie. Sell to open $55 Puts, Buy to open $45 puts.
Lavrock: Thanks for the response. So the risk increases with the premium and the spread. I haven’t seen Dan suggest more than a 5 point spread in his BPSs. Wonder if you have seen or used larger spreads and taken on the greater risk. Seems like it makes sense in only very sure situations.
Re Bull Put Spread: What would be the downside to buying a lower strike ie. the$45 put in the bull put spread? Seems like it would yield a larger Net Credit. ie. Sell to open $55 Puts, Buy to open $45 puts.
If you did the spread selling 55 puts and buying 45 puts, you would collect more in premium – about 3.90 – and risk 6.10.
Lavrock: Thanks for the response. So the risk increases with the premium and the spread. I haven’t seen Dan suggest more than a 5 point spread in his BPSs. Wonder if you have seen or used larger spreads and taken on the greater risk. Seems like it makes sense in only very sure situations.