 |
sell spread ( purchase spread is costly ):
- sell put if stock is uptrend, sell call if downtrend. resis and support are used to choose strikes.
- we always want short with higher premium than long, so we can take credit. For call, both short and long are above current stock price. Lower strike =higher premium, since it is relative easy to reach. Call buyer wants to pay more. For put, it is opposite. to make it clearer, I drew the following.
|
|
|
