Yeah, just to show people that they're two different animals. Some on here will think they're equivalent. Generally, 5-wide index spreads suck, IMO. You're never satisfied with the outcome unless held to expiration. Rodney: the skew amounts to a nickel or so in that spread, so I wouldn't worry too much about it.
And i suppose you just know the market is going to drop 50 points. Hindsight is 20/20 No need to argue what would have been the better strategy since the move as already happened. The market could of easily went against me where some would have said "You should of but a spread on to limit your risk". Good luck
No, direction was not the point. The risk to reward was magnitudes better. It didn't matter if the market went up or down or no where. It's all about the payoff. If I'm going to risk the strike differential on the call spread, I don't want to get paid 1.00 for that risk, I want to get paid 10 dollars for that risk. It has nothing to do with hindsight.
Maverick i see what you are saying and i completely understand. Thank you for pointing it out. I will definitely take a look a putting something like that on in the future if i foresee a large move up or down. Take care
I'm not "worried" - it isn't my trade. Was just pointing out that putspreads cost more than callspreads (at least in equity markets) because of skew. So you can't do a mirror-image trade at zero debit. Of course you, Mav & other experts know this, but others on the thread may not... In any case it looks like Elvis has left the building -- there's very little from HoCo on this thread any more. I apologize on behalf of all the other regulars for hijacking it...