blasher-Yes you are right I am doing credit spreads. My current AAPL spread is two sold 190 puts and two bought 185 puts. Sorry for not being more clear, I will try to be clearer. However in my latest post about GS, I did spell it out, yea. I am finding that it is better to do 2 spreads $5 apart rather than 1 spread that is $10 apart. In the case of AAPL above, a couple of months ago I would have sold one 190 put and bought one 180 put.
I am really glad that you asked your question because it made me remember something important that I have not been checking. Normally puts are more valuable than calls. So if I was expecting a stock to drop rather than do a call spread for a credit, I could also do a put spread for a debit. It will accomplish the same thing and might make more money. Here is a current example.
Let's assume that AAPL was dropping and I was getting a sell signal. With AAPL at 219, selling a 240 call for 1.68 and buying a 250 call for .73 would generate a .90 credit and $90 profit if AAPL stayed under 240.
However I could also do a put debit spread. According to CBOE, I could sell a 240 put for 22.60 and buy a 250 put for 33.60. So my cost is 8.95 or $895. At expiration I would be put the stock at 240 and sell the stock for 250 for a 10 profit per share or $1000. So my net will be 1000-895 or $105. The funds required for this trade would only be the original $895 debit vs $1000 for the call credit spread. So not only did I make more money with the put debit spread, I also used less capital.
There is one big draw back however. At expiration the debit trade generates a one day buy and sell, so it is the same as day trading. Since my account is under $25k, I have to be careful. If I had four of these, it would lock up my account.
Appreciate that you like what I posted. I am just thinking out loud. If you see something I could be doing better, or if you have different ideas, yell. I am always trying new ideas. I am sure my trading will evolve as I learn more. I plan to spend some time this month looking into VTO again. I already know the third buy is a good strategy, but I want to see if I can find a relationship with the market trend that improves the trading. This latest pullback has still got me steamed that I didn't capitalize on it more than I did. But as I said, I think it just comes down to discipline.
Jon
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