The Sell the Bounce Options Strategy

[@smbcapital]

SMB Options Workshop: bit.ly/3y7WzNH

[@smbapplicantross884]

The thought process behind legging into essentially a long debit put spread explained here is very neat and useful. I can see how securing the cash flow/risk free position after the trade develops can be valuable. It frees up mental capital and attention can be placed elsewhere. Great review Seth!

[@ProfRoofs]

I was going to do that, but I’d rather just cash out the put. More guaranteed return. Don’t let time eat away your returns. However, just add a put credit spread as well if you are going to do that. You can make it a butterfly 🦋 or condor 🦅 and possibly maximize returns even more for the bounce.

[@tamerfarouk2645]

Thank you. Very useful. The only challenge I can see if I am wrong about the direction and the market rally above 4545, total lose will 8530$. During this period, the market is totally unpredictable and within 25 days, a lot can happen. Appreciate your view. Thank you

[@robertfeinberg748]

Thank you for such a timely video.

[@Chris-jo3nb]

Thanks Seth - I have a suggestion for a new video: we know that many major individual stocks are correlated with movement of major indices (SPY, QQQ, etc.). Let's say you're entering spreads on a number of positions in your portfolio, where the risk per trade is the spread. How do you protect all these positions when the entire index goes against you ? How does risk management work when all your spreads could lose ?

[@andreimuster6866]

we dont have break event point, since we get $100 per point? right?

[@jaxsons3339]

Thanks Seth - always enjoy and appreciate the scenarios you lay out. Question - Ignoring the fact of knowing this outcome, would you (personally) typically pick the higher short strike to lock-in a smaller but guaranteed profit upfront with this much "padding", then hold it until expiration, or would you choose a lower strike that still rendered the trade @ no cost (i.e. if 4300 made the trade $0). I know in this case the profit would be higher, but in general, would you always defer to a smaller upfront guarantee or just make sure to cover yourself with a zero loss trade & go for the higher payout?

[@bhobba]

A very useful tool to know when buying a put or a call. If it is in profit enough selling an option can give a guaranteed profit regardless of what happens.

[@couchpotato684]

Thanks.

[@andriimarchuk9649]

I had a similar idea to sell the bounce instead of buying the dip over the last few weeks. The long trend is down long term, until war end, or escalations end, or somehow there will be good to cover the money and less need to pull out liquidity from the market.

[@J123G]

This wasn't a traditional spread since most of the time this trade was on it was only 'long' the 4545 put leaving that net long position open for lots of negative theta (loss), yes this 'spread' made money but the vast majority of the profit was simply that initial long 4545 position. A matter of fact the 'Long' 4545 trade could have simply been closed on the day you opened the short 4475 and it would have profited 17,150-8,530= $8,620 after the 2 weeks (day 25- day9). Why not take the lucky "long only" profit of $8,620 after 14 days instead of keeping the trade on for an additional 9 days and hoping the trade does better?

[@403http]

I think this signals that the bottom is in.