IMO, credit spreads are the best option strategy if you almost know you've got a stock that can't go down; there is left two remaining possibilities (it goes up or stays still), and both are winners. Alternatively, that is the one time I would consider covered calls, if it is also a low priced stock (e.g. below $10-$15).
OptionTrader, how do you feel about naked puts instead of CCs? Also, I'm curious to know what your opinion is on the ITM debit spread vs that OTM credit spread.
You can have fun answering your own tricking questions and doing some educating. I'm curious, I'm not too familiar with credit and debit spreads.
Fair value equation: strike + call = underlying + put + cost_of_carry - dividend where: cost_of_carry = cash_flow * days/365 * interest rate strike, cost_of_carry, divident being constant, to compare strategies (pay-off) use: call = underlying + put covered_call = underlying - call = - put bull_vertical_spread = sell_higher_strike & buy_lower_strike bear_vertical_spread = buy_higher_strike & sell _lower_strike credit_spread = bull_put_spread or bear_call_spread debit_spread = bull_call_spread or bear_put_spread bull_put_spread = - put_hi_strike + put_lo_strike for credit bull_call_spread = - call_hi_strike + call_lo_strike for debit
Hydro, the OTM credit = the ITM debit. The ITM credit = OTM debit. CCs = naked put. The OTM credit is similar to the ITM debit since the 'credit' you get back is the same as the premium that has to decay (if any) in the ITM debit. The risk profile is the same. My wording is bad, hope that made sense.
picking no lose stocks is more of INVESTING not trading. trading is momentum investing is patience no lose stocks needs patience