Flying High – Put Credit Spread in BA

//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+00:00