Profit-Loss ratios on spreads vs. nakeds

Discussion in 'Options' started by optionsgirl, Jan 12, 2011.

  1. Thanks for the clarifications. I think I would rather side with the old timer's dual usage of the term "naked". :)
     
    #11     Jan 13, 2011
  2. Calling me an old timer is one of the nicer things said about me lately. :eek:
     
    #12     Jan 13, 2011
  3. tomk96

    tomk96

    i'm not sure the math you are doing actually mean anything. i'm not sure how comparing the 15-16 put spread to the 11-12 put spread are telling you anything.

    the 15-16 put spread is slightly out of the money, but has a reasonable chance to expiring in the money. especially considering the range for the XLF. the 12 strike is over 25% away.

    if you think the xlf is going lower but don't want to just spend the premium on the 16 put, you can buy the 15-16 put spread. if you want to spend even less money, you can sell the 11-12 put spread against it to lower your net premium paid out.
     
    #13     Jan 13, 2011