Even an OTM credit spread is dicey on an underlying like FXI that's down 7% one day, up 5% the next. It will be interesting to see how long this continues. IMO ........ FXI options are something you buy, not sell under these market conditions jimmyjazz is stuck between a rock and a hard place with that debit spread. If the position stays ITM he breaks even, OTM he loses. Like I posted before:
I don't agree. I find that I can get a better R:R with debit spreads. This is real world trading, not some theoretical result. I can hit very close if not on the middle of the bid:ask on either spread and the debit tends to work out just a bit better. Of course, closing fees must be accounted for.
Really? If my debit spread expires ITM, I only break even? Do you even have a shred of a clue? Explain yourself. I dare you.
Maximum value of the 42/42.5 put debit spread is $0.50 minus commissions and the bid/ask spread, you paid $0.40, I doubt you will see much of that $0.10. On a side note when is the expiry? I didn't see that posted.
I told you the expiry. "Jul15". The July 2015 options. 3rd week of July. You're the idiot who thinks that "Jul10" means "10th of July". Negative. It means "3rd week of July, 2010". Use "JulWk2" or some variant to communicate to the rest of the world what the hell you're talking about. We'll see how much of that $0.10 I recover. My commissions are low and (at entry) I had an 85% chance of not experiencing any bid/ask issues whatsoever on close. But regardless, your command of the English language is so poor that you paint yourself into a corner with bullshit statements like "ITM he breaks even", leading the casual observer (or anyone with a functioning brain stem) to believe you have no fucking clue what you're talking about. Let's see how YOUR trade works out while we're at it. So far, I'm way ahead. 100% profit > 100% loss (except in your twisted world).
Often on in the money options mid is not fair value. But this isn't a debatable issue. Price both the credit spread and the debit spread and pick the one you are going to get better execution on. Functionally they are equivalent except for early exercise risks on the itm spread.
Relax ..... All that was posted in regards to the expiry was "I bought the 42/42.5 Jul15 put debit spread" Exact expiry could be July 10 2015, July 17 2015, July 24 2015 or July 31 2015.
That I can agree with. Yep. I do it every time. I almost always end up with the debit spread. A penny either way makes a difference on expectation (which might beg the question "how accurate is that calculation, anyway?" and I wouldn't argue). Eh, what? With an ITM debit spread, the long leg always covers the short leg. Not so with a credit spread. Did I misunderstand you?
Hey, look! You ignored everything else! Predictable. And no, those exact expirys would be stated as JulWk2, Jul15, JulWk4, and JulWk5. Learn the language.