Bearish Outlook & Low Volatility
Buy 1 ITM Put; Sell 1 OTM Put at Lower 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%. Increasing IV will help this trade as inversely falling IV will hurt the trade.
Time decay works negatively against this trade. in my favor. If the strategy is not ITM at expiration it expires worthless
This trade should be less than 1% of my account.
If my position shows a profit near 25 – 50% of the max potential gain, I will close the position early to lock in profits.
Long put strike minus net debit paid.