How is this options strategy called? Where to find more info?

Question

How do you call the diagonal spread resulting of a combination of a calendar spread and a bull put spread?

For example SPY,
You sell Feb 144 Puts
and buy Mar 139 Puts

Where to find more info about it?

Answer 1

You're doing a diagonal bull put spread where you want the SPY to close above 144.

I actually like the strategy as you have less time decay on your longer term long position. Normally, you'd do a Feb 139/Feb144 bull put, but with this your 139 position should have less decay vs. buying the Feb 139 and letting it expire worthless.

The only thing about it is that if the position moves on you between Feb and Mar, you'll either incur greater margin requirements (selling a Mar 145 or whatever for Mar) or an additional commission to roll your Mar position up or down w/ where the SPY moves.

On the plus side, if you have your points set well and the SPY doesn't move much from Feb to Mar, you can sell Mar 144 and keep a little bit more money in your pocket due to already having the Mar 139's.

You can read about these types of strategies in Options as a strategic investment by MacMillan, or through Optionetics.

Or you could just ask me and I'll be glad to answer your questions.

Hope that helps!

Answer 2

I could tell you, but I'd have to think too hard....what "idea" are you trying to implement - I could solve that easier.