Ok, so I know debit spreads need the underlying to move past the outer leg to reach maximum profit and typically you'd need to know the direction, but what if you didn't…
Example. GME(or any volatile stock): On 6/6/2024, Price $46.55
EXP. Date 6/7/2024
Sell $45.00 Put $5.30
Buy $46.00 Put $6.10
Buy $47.00 Call $$6.35
Sell $48.00 Call $5.80
Midpoint Net Debit: $0.85
With this set up on a high volatility asset is a guarantee win no? If the price goes below $45 you get $15, if the price goes above $48 you get $15. Since the spread between each spread is $1 you only need $100 to make this trade right?
Posted by SeaworthinessNice234
1 Comment
This is essentially a short iron condor. You lose $85 between $46 and $47. Breakeven at $47.85 and $45.15. So a $2.70 range where you lose or breakeven. Everything else is some profit but your max reward is 18% and you have to be careful for mean reversion.