Credit spread 1:1

[wxytrader]

So going by the box setup here if I get filled at this price I am locking in .03 cents profit. So with 250 contracts I can lock in a $500 profit with no risk? So why isn't everybody doing this? Oh maybe because you will never get filled at that price? Show me an example where you have actually locked in profits...and how often can you do that?

 

[TheDawn]

$10,000. Risk @ 10% = $1,000 / $250 per contract= 4 contracts to trade

For a credit spread, isn't this $400 in risk with a $1 wide spread?

Also, I keep hearing people talking about getting a 1:1 risk reward with credit spreads...how do you ever get 1:1 on a credit spread unless you go ITM? AND if I'm going ITM with a credit spread, then why not just do a debit spread?

Read on the concepts of implied volatility vs real volatility. Once you understand these two concepts, you will understand what's the real risk with options and why credit spreads seem to be more lucrative than debit spreads.

 

[wxytrader]

Read on the concepts of implied volatility vs real volatility. Once you understand these two concepts, you will understand what's the real risk with options and why credit spreads seem to be more lucrative than debit spreads.

Yeah but all volatility is implied when it comes to options pricing.

 

[taowave]

Just when I thought it couldn't get any worse

 

[Overnight]

Just when I thought it couldn't get any worse

The night is young.

 

[destriero]

How are they equivalent? The short vertical performs better than the long vertical.

Price drops to $453.36

Short vertical spread: $164.31
Long vertical spread: $30.45

View attachment 328589
View attachment 328588

The short vertical also performs better if the price goes against you.

Price increases to $457.38

Short vertical spread: $-325.77
Long vertical spread: $-419.99

View attachment 328593
View attachment 328594

Dood, same strikes are =

Just go away.

 

[wxytrader]

Dood, same strikes are =

Just go away.

It doesn't matter that the strikes are equal, the short call performs better than the long put. Look at the screenshots.

 

[taowave]

Hey,you are right.My advice is to average down..There should be plenty of opportunity...

It doesn't matter that the strikes are equal, the short call performs better than the long put. Look at the screenshots.

 

[destriero]

It doesn't matter that the strikes are equal, the short call performs better than the long put. Look at the screenshots.

 

[wxytrader]

View attachment 328609

Yes and in the original post I said what's the point of selling a call vertical spread ITM to get to 1:1 when you could just buy a put debit spread instead and carry a better risk reward...but it turns out the call credit spread will out perform the put debit spread.