The choice of bear put rather than bear call spread is because whatever elevation currently exists in volatility is evenly distributed among the legs, so paying or collecting premium is fairly neutral, and should it violently react against you the loss is capped, right? Assume you plan to hold for days/weeks but definitely exit prior to expiry? Or at what point would you consider rolling out/down if it's working?
Both structures fit well here with Friday's solid Bearish Engulfing pattern.
I chose the Bear Put Spread because the max loss is much lower — and with gold this strong right now, anything could happen. Last week I almost got hammered holding a Bear Call Spread on this same underlying.
I'm considering opening a Bear Call Spread on Monday as well if nothing better shows up (MU is also in the mix for potential entry).
Thanks for the additional color Mansur. I mostly trade bull put spreads & prefer to leg into them. Your trade makes a lot of sense. Friday appears to have been a key reversal day across the precious metals sector. GDX correlates.
The choice of bear put rather than bear call spread is because whatever elevation currently exists in volatility is evenly distributed among the legs, so paying or collecting premium is fairly neutral, and should it violently react against you the loss is capped, right? Assume you plan to hold for days/weeks but definitely exit prior to expiry? Or at what point would you consider rolling out/down if it's working?
Hey Nathan,
Both structures fit well here with Friday's solid Bearish Engulfing pattern.
I chose the Bear Put Spread because the max loss is much lower — and with gold this strong right now, anything could happen. Last week I almost got hammered holding a Bear Call Spread on this same underlying.
I'm considering opening a Bear Call Spread on Monday as well if nothing better shows up (MU is also in the mix for potential entry).
Thanks for the additional color Mansur. I mostly trade bull put spreads & prefer to leg into them. Your trade makes a lot of sense. Friday appears to have been a key reversal day across the precious metals sector. GDX correlates.