lack of credit in spy bull put spreads

[sss12]

I realize puts are usually "expensive", but they seem to be unusually expensive across the entire chain.

ie: with the spy at 216.5 selling the aug 210/208 put credit spread results in a .22 credit at best.

.22/2-.22 = 12%, Hardly enough ROC to justify the current 19 delta of the 210 put(used as approx. of prob of going ITM) .

2 questions, 1.- has this "skew" been cased by the recent almost continuous rally ?
2.-what are alternative mildly bullish strategies (ie: slightly itm calls) that don't not have 3 + legs ?? thanks

 

[OptionGuru]

• 3% OTM with only 1 month to go ......... Of course the credit will be peanuts.
• Buy 1-strike OTM calls in this market.

 

[sss12]

3% OTM with only 1 month to go ......... Of course the credit will be peanuts.

thanks, but I don't think it is really a question of the nominal dollar amount . It is of how the ROC (or lack thereof) compares to the delta (used as approx. of prob of being ITM). anyone else ? thanks

 

[cdcaveman]

Premium is cheap......period.... Good luck we are in a doldrum ... .. I'd by puts six to 8 months out...

 

[sss12]

• 3% OTM with only 1 month to go ......... Of course the credit will be peanuts.
• Buy 1-strike OTM calls in this market.

although I do see rational behind your OTM recommendation, thanks.

 

[OptionGuru]

IMO ......... Selling highly volatile instruments such as options isn't a good idea. Buying is much better.

 

[El OchoCinco]

Let's please stop using ROC (Return on Capital) incorrectly. Unless you put 100% of all your capital into this trade and that was the only trade you did all year then it is not even close to representing what you mean.

What kind of credit are you expecting for 1 month to expiration and deltas near .2 and IV of 12.5%

 

[trilogic]

optioncoach, how should it be used or calculated and why so ? thank you

 

[sss12]

Optioncoach, to expand on trilogics question and to get to the gist of my OP....what ratio/value do you look for between credit received from the spread and delta ? Thanks in advance for your response.

 

[FreakofNature]

Premium is cheap......period.... Good luck we are in a doldrum ... .. I'd by puts six to 8 months out...

I would rather sell ITM calls 8 months out.