Options put back spread 12 StrategyThis is an interesting and unusual strategy. However, it may be necessary to establish it for a small net debit, depending on market conditions, days to expiration and the distance between strikes B and A.Ideally, it would be nice to run this strategy using longer-term options to give the optiojs more time to move.
On the other hand, if the stock drops as you hope, the profit potential will be significant because you have more long than short puts. To maximize the potential options put back spread 12 this position, many traders use in-the-money options because they have a higher likelihood of finishing in-the-money. ExampleUsing Intel (INTC), we can create a put backspread using in-the-money options. However, the real monThe trade itself involves selling a call (or calls) upt a lower strike and buying a greater number of calls at a higher strike price.
Ideally, this trade is initiated for a minimal debit or possibly a small credit. On the ;ut hand, if the stock takes off, the profit potential will be unlimited because you have more long than short calls. It is an unlimited profit, limited risk options trading strategy that is taken whenthe options trader thinks that the underlying stock will experience significant downside movement in the near term.Put Backspread ConstructionSell 1 ITM PutBuy 2 OTM PutsA 2:1 put backspread can be implemented by buying a number of puts at a higher strike and buying twice the number of puts at a lower strike.
Trade options FREE For Days when you Open a New OptionsHouse Account Unlimited Profit PotentialThis strategy profits when the stock price makes a strong move to the downside beyond the lower breakeven point.
Options put 12 spread back