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Cheap And Easy Recipe. Cheap Auto For Sale. If you want to do it sooner that is okay, just keep in mind the longer the play is open the greater the chance is unexpected stock movement could happen and ruin the trade. This play is best with only a few days before expiration 2.
BULL means I am expecting the stock to go up. PUT means I am using put options. SPREAD refers to both buying and selling puts at the same time, and in this case it is a vertical spread where the expiration dates are the same the strike prices are different.
I use the front month expiration date so that the obligation is very short. The neat thing about bull put spreads is that if you are not qualified to sell naked puts you can get around the requirement by just adding an insurance policy so you are not naked. This will also drastically reduce the risk in the trade. You are actually turning it into a vertical spread.
What I mean by adding an insurance policy is that you buy a puts option in addition to selling a put option. Once I know what the stock's support price is, I will then sell a put short position with a strike price below the support line price slightly out of the money.
Then I will buy a put long position with a strike price lower than the puts I sold further out of the money. Here are some cheat notes: Find support on the stock you want to do a bull put spread on.
Figure out which put strike price is slightly below that support price. This is the put option you will sell-to-open your short leg. Figure out the next put strike price that is below the put you sold, this is the put option that you will buy-to-open your long leg.
To avoid being naked for even a second, buy this put first your long leg , then sell the upper put strike next your short leg. Sometimes your brokerage firm does not understand you are doing a spread and disallows it. A simple phone call to the firm should resolve the issue. Once they realize you are wanting to do a vertical spread and marrying the put you sold to the put you bought they should be able to override the action in your account and allow it.
Some trading programs allow you to enter the trade in as a spread all at once so this does not ever become an issue. This one is not so chicken, as I have three weeks to be in the trade. I guess I would call it a bull-put-spread and not a chicken-bull-put-spread, but it is a real trade and it shows you the strike prices and support line to help you visualize what I mean when I tell you to look for support and the next two strikes down I also wanted to catch some extra money the day before expiration and open a real chicken bull put spread but I missed it!
I was travelling and the market makers actually manipulated it a day earlier than I expected - two days before expiration date instead. Keep in mind I want to do a put spread play, with a stock that is expected to move up, that is why TASR was the perfect candidate - it loves to run up when it is near support! Risk Considerations Remember selling puts means you can get the stock put to you.
In this case I brought in. To avoid being naked on your calls, you will need to buy an insurance policy by buying-to-open a put that is one strike price lower than the strike price of the put you want to sell-to-open.
To be safe, and to keep your broker happy: However, some firms will get grumpy and fight with you and say you have a margin requirement for the few minutes you did not have your long put in place. Don't accept that, keep asking to talk to the next higher manager until the problem is resolved.
However, make it easier on yourself and just buy the put first " then complete the spread by selling the other put after you are filled on the buy order. At support, the stock has a motivation to move up. You just let both puts expire, and keep the money, with a big smile on your face. By expiration date the stock closed way up and it was a done deal, and yes I had a smile on my face! How About Damage Control?
As an important side note, please do not ever do a bull-put-spread for real unless you know how to unwind one, just in case the trade goes wrong! Take your profit of. Make a list of high volatility stocks technology has tons, like EBay, Tasr, Rimm about one week before expiration date. Start looking for a sharp pull back going into expiration week, it seems to happen most the day before expiration date as the market makers start manipulating prices coming into expiration date.
When you see a quick pullback, look for the spread as it stops it's fall and just starts to move back up. It is usually quick, more of an intraday view, but that is where the money is.
Already have pre-written notes of support and the strike prices you will look at for the spread so you can quickly try to see if they have beefed up the option premium and it is profitable. Do not try to take more than the natural spread, it usually runs up way to fast to try to get in the spread and get a better credit. In the past, I have missed the play because it moved too fast don't try to shave points in the spread this late in the game.
What To Expect First, practice, lots of practice. Please do not attempt this technique until you have done plenty of successful practice trades. You can actually go back in time and try this so you can have your practice trades done in a day or so. I am able to get old option prices in Optionsxpress. Bull-put-spreads can be such a sweet deal. First you are cheering for the stock to goes up and if it falls you unwind the upper leg and profit on it falling!
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Often thieves will steal someone's identity and then go on to run up a host of bills in that person's name. By the time a person realizes what has taken place, it is often too late to do much about it. So the real question is how can you fight back against these criminals and keep your good name intact as well as your credit and money. Recently the right to freeze credit reports and stopping credit from being issued in a person's name has become available.
By locking down your credit, nobody can get your credit file or details to run up credit in your name leaving you to deal with the bill. Who can lock down their credit? Almost anyone can lock down his or her credit.
Since , when California allowed its residents to lock down their credit reports, other states have began to follow suit including New Jersey, Louisiana, Nevada, Connecticut, Maine, North Carolina and Colorado. Other states such as Texas, Illinois, Vermont, and Washington will only allow victims of identity theft or those who have fallen victim to a security breach to freeze their credit reports.
If your area is not listed here, then by inquiring at any one of the three major credit-reporting agencies you should be able to find out what your state allows.
Anyone can ask the major credit reporting companies to place a fraud alert on a credit report. How this benefits you is that the company alerts you when credit is requested and you are asked permission to proceed with the credit.
There is one problem with this method and that is creditors are not required to check the alert or even ask your permission. A credit freeze takes the next step in security enforcement. With a credit freeze nobody can open any type of credit line under your name or even gain access to your credit file.
What this means is that your credit details are off limits to everyone even credit lenders, insurance companies and potential employers. How does a credit freeze work? Credit freeze is quite simple really, but very effective. What happens is, when credit is requested, for example a credit card, cell phone or even a personal loan, the company that is considering giving the credit will call one of the three credit reporting companies to ask for access to your credit file.
If you have already requested a freeze on your file then the credit reporting company will tell the creditor that they don't have access to the file as it is frozen.More...