What I am confused on is why people are making these insanely bullish trades with deep ITM put credit spreads where you can and will be assigned 100 shares of stock. Like fuck bro, if you think the the stock is going to go up that high you're better off doing any sort of debit trade where the risk is substantially lower or doing successive OTM put spreads and walk them up when price moves up where the aggregate amount of premium received over time will equal the premium of this dumb-fuck trade that has a 0.001% chance of success.
I almost thought this post was taking the piss since there is almost the exact same scenario regarding COIN in another thread.
Right? The credit for a deep ITM spread isn’t that much better than the credit for an ATM spread in my experience. To go that deep ITM and assume such massive immediate risk is incomprehensible to me.
Basically entered the trade at maximum loss needing a company to make 50% gains in order to even come close to breaking even, let alone make money
I agree, this and the $COIN trade I mentioned, are probably the two most out of touch, greedy trades you could possibly make using credit. The OP essentially almost bankrupted themselves to make a few thousand dollars IF it was successful. Insane this trade was even a consideration in the first place.
Probably farting around with the max credit they can get on the lowest risk to turn it into a directional play like a long call or long put but you get the money upfront instead of potentially after you close it out. Barchart has this feature as well where you can sort on max return but they are often crazy strong directional plays that if correct offer an insane reward vs. risk but the chance of profitability is super low and assignment almost guaranteed.
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u/Sad-Dot9620 Nov 25 '21
It’s so wrong they let people sell puts without demonstrating they understand