first - is this a high-risk time for selling put spreads? (is the market rolling over - it's looking pretty volatile). Second (and the real question) - what is a good target for premium in percent of risk terms? ie - $1 on a $5 spread - is that too close to the risk zone? Would you settle for 10% or does the R/R not make sense then?
Maybe, but buyers are also offering more premium to entice the sellers to take the risk. If you think the market is rolling over, then just sell calls or call spreads. Don't sell puts. That's not a very useful way to look at premium. For example, the May ATM call on BA is going for about half the May ATM call on NFLX even though the cost of one share of BA is slightly more than 1 share of NFLX. Personally, I don't like selling spreads because the probability of making money on a trade is not as good as selling naked. Also, you'll likely end up paying somewhere between the bid and ask for each leg of the spread so more slippage and commissions to put the trade on and take it off. Spreads work best when you're really sure of where price will go and want to put on a larger trade or use more leverage over a smaller range of price. Also useful for IRAs where you can't sell naked calls.