As long as you have an approach to close out or partially hedge the positions when it makes a larger than normal move, you can manage this strategy for consistent profits. As usual it comes down to risk management.
You are right, the lure of additional premium without any additional margin is often too tempting. But you have added the risk that now you lose on a move higher whereas with the put spread alone you did not so the probabilities of profit have been decreased, so to speak. Put spreads are always a good first choice because the skew allows you to go further OTM than you might be able to on the call side. I know markets often crash harder than they explode higher, thus the skew, but it is part of the risk profile when selecting strikes. But there are certain times when you may take a directional bias and choosing spreads on the other side of that bias does give you a great trade. Adding the other spread for an IC should be done with careful consdieration to all the TA tools we discuss here to determine how far out you should go to at least give you the best chance of having both sides expire worthless or be closed for a profit. For JAN I am only looking at puts really-not today of course with the surge in the SPX but if we were done again today I might have looked more intently- and would only add calls if I could go deeper than what I am seeing now on the strikes. Of course there is hardly any premium there anyway.
Coach, With the bid of 50 cents on the JAN 1325/1335, I suppose it would be worth seeing the next set of higher strikes.
That is not a bad price at 60 points OTM but still fear the upward burst. I bet in hindsight those strikes will look safe but I agree that a few strikes higher would be more of a comfort level if I chose to do calls. Also that is the mid-point or so, so the actual fill might be less than $0.50. Then again the market just coughed up a 10 point gain down to just 4 points so strength is waning...
I am looking but since we are still positive for the day I am hesitant to touch anything. If we could bleed to 1260 this week I might bite on the 1170/1180 put spread but looking for at least $0.40 to consider it. With my luck I will never get it lol.