Bull put spreads is my favorite strategy (in bull/neutral markets of course) even if the stock doen't move, you profit from time passage
Please give me some advices comments on how to set up the short/long put?
How to set them up to get neutral on volatility? So the long put offsets the volatility effect of the short put...
2007-01-30 13:14:03 · 2 answers · asked by Carlos G 3 in Business & Finance ➔ Investing
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2007-01-30 19:08:35 · answer #1 · answered by Anonymous · 0⤊ 0⤋
A bull put spread is selling a put at one strike price and buying another at a lower strike price, both below where you expect the under laying issue to be. Your gain is limited to the difference in the premium you receive while your loss is limited to the difference in the strikes. To get a neutral volatility you would have to move diagonally with one of the positions. Of course as time passes the vols change so why complicate the trade for that? I go diagonal for pricing considerations but not vols.
2007-01-30 22:45:52 · answer #2 · answered by gatzap 5 · 0⤊ 0⤋