Bull put spread

mac · Dec 8, 2020

Never used a put spread before...no big deal,have been trading options for awhile on and off.
I’m looking at SPCE now,premiums are nice, volatility is high for the impending launch this Friday. So, I’m thinking if this launch isn’t successful the stock price could tank well below my short contract strike, which isn’t good. Should I leave this one alone?
Thanks

OptionsOptionsOptions · Dec 8, 2020

I would Buy 1-strike OTM Calls.

BlueWaterSailor · Dec 9, 2020

OptionsOptionsOptions said:
I would Buy 1-strike OTM Calls.

I assume you're talking about a $1-wide spread, right? If so, why specifically buy calls rather than sell puts? The two are synth-equivalent.

OptionsOptionsOptions · Dec 9, 2020

BlueWaterSailor said:
I assume you're talking about a $1-wide spread, right?

No spread ...... only the long OTM calls.

BlueWaterSailor said:
If so, why specifically buy calls rather than sell puts? The two are synth-equivalent.

Less risk.
More profit potential.

BlueWaterSailor · Dec 9, 2020

OptionsOptionsOptions said:
No spread ...... only the long OTM calls.

Oh, OK - got it now. I was just confused by "1-strike" phrasing.

Less risk.

More profit potential.

I agree that it has more profit potential, but can't picture a situation in which a long call would have less risk than a spread; TTBOMK, less risk is what you get in return for limiting your profit potential in a spread. If you have a counter-example, I'd appreciate one.

mac · Dec 10, 2020

I ended up buying some otm calls instead. The 18dec. 31c. Just wasn’t the right stock for a bull put spread. Hopefully this historic launch will succeed. It’s sometime tomorrow. No press allowed. Anyone in N.M? Look out your window!!

mac · Dec 20, 2020

mac said:
I ended up buying some otm calls instead. The 18dec. 31c. Just wasn’t the right stock for a bull put spread. Hopefully this historic launch will succeed. It’s sometime tomorrow. No press allowed. Anyone in N.M? Look out your window!!

Well.... that trade was a complete bust.! No SL.

I’m long the stock anyway. Computer problems can be fixed.
Ready for the next flight.

.sigma · Dec 21, 2020

mac said:
Well.... that trade was a complete bust.! No SL.

I’m long the stock anyway. Computer problems can be fixed.
Ready for the next flight.

But if you learn from this complete bust of a trade, is it really a loss?

Next time before you buy calls, make sure the stock isn't up 100% since summer.

mac · Dec 21, 2020

I agree with that.

I was hoping to capitalize on a successful launch,quickly

mac · Dec 21, 2020

So I was thinking about a credit spread on GRWG.
But there is hardly any OI or Volume except for the 40 strike.
Would that imply no spreads being held on that stock?