Good morning Perry –
For this trade, since your thesis is bullish (the stock price is going to go higher) you would be selling the higher put, and buying the lower put.
Therefore,
STO (sell to open) Oct 630 put
BTO (buy to open) Oct 625 put
Dan when you explain these trades you show the risk involved in the trade but you don’t use the stop that is usually sent out with the trade that creates an even lower risk if the trade goes against you.
bear call and bull put spreads are specific variations of the general class of vertical spreads. In order to collect a credit, you must sell them to open. The lingo would be something like: Sell -1 Vertical PCLN 100 OCT 12 625/630 Call @ XXX LMT to open. it might be stated slightly differently depending on your broker or your trading software.
I find it helpful if you also write out the trade. Example AAPL Bull Put Spread SO Oct 630 put; BO Oct 625 put for a net credit.
Helps me quickly understand the trade and the order I have to place to make thew trade.
That was already sent out in an email.
Dan, what is the actual lingo when placing the trade. STC , STO, BTO????
Good morning Perry –
For this trade, since your thesis is bullish (the stock price is going to go higher) you would be selling the higher put, and buying the lower put.
Therefore,
STO (sell to open) Oct 630 put
BTO (buy to open) Oct 625 put
Hope that helps!
Dan when you explain these trades you show the risk involved in the trade but you don’t use the stop that is usually sent out with the trade that creates an even lower risk if the trade goes against you.
bear call and bull put spreads are specific variations of the general class of vertical spreads. In order to collect a credit, you must sell them to open. The lingo would be something like: Sell -1 Vertical PCLN 100 OCT 12 625/630 Call @ XXX LMT to open. it might be stated slightly differently depending on your broker or your trading software.