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Strategies & Market Trends : Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Hank Scorpio who wrote (2254)	2/25/2021 5:34:06 PM
From: THornsby	Read Replies (1) \| Respond to of 2591

Could you double check those quotes? If I'm looking at the right ones, I don't see a 90 cent credit. > I like the set up of a credit diagonal spread. This greatly inhibits return and potential return. The Probability of a profit can be exceptionally high, however. And the bonus kicker here, if the spread is constructed properly the underlying will actually make the spread more profitable as it moves against you - for a small window of time. (IV notwithstanding) Also, the long term expected profit based only on the probabilities is positive. ... inhibits return and potential return? I don't follow. Moves against you? If the SPY moves up, it's all good since it was put on for a credit. Also good if SPY drops soon and even better if the SPY tanks. It's the lingering slow dropdown to $380 that goes negative due to the higher theta burn of the long March put. And a miserable outcome if IV soars. I've had some success with ultra high IV double diagonals and double calendars when there's pending news that's going to tank but that's a different story.