Sell 1 ATM Call; Buy 2 OTM Calls at Higher Strike Price for a net debit.
Enter trade for 45 – 90 days
Since I am a seller of this option I will only enter the trade when IV is below 50%. Rising IV will help this trade as inversely declining IV will hurt the trade.
Time decay works against me. If the position is not In The Money at expiration then it expires worthless.
This trade should be less than 1% of my account.
If my position shows a profit near 25% of the max potential gain, I will close the position early to lock in profits.
There are two break-even points: 1) Short call strike plus net debit paid 2) Long call strike plus the difference between the long call strike and short call strike plus net debit.