Flying High – Put Credit Spread in BA

Home/Blog/Flying High – Put Credit Spread in BA

Flying High – Put Credit Spread in BA

I wanted to buy a call option in Boeing (BA). When I looked at the price of the call it was high due to the increased implied volatility that we are currently experiencing. High implied volatility increases the cost of buying put and call options. It is the buyer of these options that bears the cost and is at a disadvantage. What is an options strategy that can take advantage of this increased volatility for the benefit of the trader?

Let’s use the real life trade example that I placed in Boeing (BA). The call options were more expensive then they typically are. A strategy for trading options that benefits from price remaining where it is or moving up is a put credit spread. A put credit spread is created when you sell a put option and buy another put option with the same expiry at a lower strike than the put option that you sold. Because of the elevated implied volatility the amount of credit you collect on the trade is more than you would typically collect.

In the video you can see how I traded Boeing taking advantage of the current market conditions.

2018-11-08T22:43:15-05:00
YouCanTrade is an online media publication service which provides investment educational content, ideas and demonstrations, and does not provide investment or trading advice, research or recommendations. Click here to read important disclosure, disclaimer and assumption of risk information. Active trading generally, and options, futures and digital assets trading in particular, may not be suitable for all investors. Past performance, whether actual or simulated, does not guarantee or predict future results.
TradeStation Securities, Inc. provides support and training channels hosted on its affiliate YouCanTrade. Any other services offered/hosted by YouCanTrade are not sponsored, endorsed, sold, or promoted by TradeStation Securities and it makes no representation regarding any YouCanTrade goods or services.
TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.
CME GROUP or CME GROUP GLOBE are trademarks of Chicago Mercantile Exchange Inc. and have been licensed by YouCanTrade for use in connection with the FAST channel and the Spring Summit. Any services offered by YouCanTrade are not sponsored, endorsed, sold or promoted by Chicago Mercantile Exchange Inc. or its Affiliates and none of them makes any representation regarding any such goods or services.
Go to Top