Thanks but if you sell the higher strike call first then you are naked short unless you own enough stock? Is the risk then unlimited if the stock moves up in a hurry?
RetiredMm, when you sell that naked call first, doesn't that expose you to unlimited losses or do you have a underlying stock position you are selling against? Thx in advance
Good info. Ive been playing around with that some this week. So if you buy a 560/570 call spread and its at 550 is this considered buying a otm call spread? Most people say to buy lower strikes below the current price but that limits profit and widens loss. When you buy above it increases gain and minimizes loss. So your approach makes alot of sense if the stock would get a big move vs buying straight options with higher loss potential. This looks like a great way to play earnings on high cost options too. Thanks for the info.
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