I'm starting to wonder, what makes you guys decide whether to sell a put spread or buy a long call spread? Does it have to do with implied vol and other vol measures? Seriously though why would anyone choose the short put spread over the long call spread?
If we ignore a lot of stuff, and I mean a lot of stuff... like what level vol are we at, how wide are the strikes, how far is the nearest one to the atm, how much time to expry... ya know - the lil' things. One correct answer might be no more complicated than "one is better bid than the other." Again ignoring lots of stuff, and assuming you are talkin eqwiteez, that trade to a natural putz skew... I'd prefer to sell the put spd all day, every day, over the call spd, because me likey what's most likely to happen to vol as I move towards my long strike of that spd. I don't like to say certain things with options because they be confusin nuff to people, but sellin call and put spds always felt like I was gettin long vol. EDIT: Oh, and if taos interpretation of your question is more accurate than mine... ignore all of the above. The reason is - you aint gettin a quote as easily on a deep put or deep call spd. Oh, how I hate when people call DITM's by their real name.
What others have said plus if my system, for example, shows a high percentage of winners if I just let it expire (bullish) then no closing costs and b/a spread losses. Of course lots of the time you'd be better off closing if you have most of the profit.
Wheezoos point about the bid offer spread is a very good one. If the call vertical of a 15 point box is trading at 14,the put vertical will trade at 1..Most likely the put vert will be a tighter market(in dollars)
i'm aware of boxarb, I'm just speaking in a real trading sense, lets say youre bullish on AAPL and your choices are a short put spread/long call spread, which would you choose, and why?
Whichever one has the tightest bid offer spread.. Same risk,same return.. The days of one spread being mispriced relative to the other,went the way of the dinosaur