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Bull Put Spread In Trading Weekly Options

By John Mylant


What happens when the market appears to be bullish? Weekly options, using a bull put spread is a good options strategy to put in play. Trading options, especially if you enjoy weekly options, the bull put spread is a superb option strategy to learn. We are looking for either range bound or bullish movement in our stock to actually employ this option spread.

Imagine selling a put option with the strike price out-of-the-money (OTM) and then buying another put option just farther (OTM) to protect the one you sold. As you bought a put option at a higher strike price, it is not as expensive as the one that you sold and you right away get a credit. This particular option strategy enables you to get your profit up-front and is well designed to utilize with weekly options.

As the market trends how you need it to go, meaning the market is either range bound or rising, the put options expire worthless and you keep the credit as your profit on the trade. If the stock trend is down, then you'll break even point is the lower strike price plus the credit you received. This option strategy offers phenomenal revenue potential on weekly options if done properly. But one's maximum loss is the difference between the strike costs minus the credit received.

The bull put spread is an option spread that is classified as a "Credit Spread" because your profit is given up front. What you received up front is your maximum profit. Since a once-per-week option here is best executed on a short term basis, the weekly options offer a chance to create a weekly income. Not only is this a good opportunity for income, but time rot can and should work for you here. With the short term period of this weekly option play we'd like the stock to either barely move or move upward. If this happens, our weekly option may continue to erode everyday and work in your favor.

Read more on call options explained too.




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