Originally Posted by
JamesBond
I put on the 19 Feb 3000/2900 AMZN spread this morning for a $31 credit on 5 contracts. It's down about $100 in total. The $3000 Put half is up about $1500. Had I done it the way I normally do, I would be selling another put and putting a stop limit on it in case the market takes a dive. I get how this works, but I prefer to just sell naked puts and put in stops. I'll watch it for awhile, but I will sell out of the 2900 Put at $72 (I bought it at $70), and ride the sold puts.
Thanks for the info.
Whatever works; but with the spread uses $35k in BP vs $300k. For me it’s a no brainer to use a spread. If the underlying is down on a put credit spread, a naked call will be down too.
If you sell the $2900 put back you now have 5 $3000 puts and will use $1.5 million in buying power (if I’m understanding what you’re doing right now). An important part of selling an in the money put spread is that this is more of a theta decay play (time decay) so time ticking away is where you’re going to make your money all while limiting downside and preserving buying power.
But, got to do what you’re comfortable with.