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09

October, 2019

Sell OTM Call Spread — Bearish Strategy For Earnings Trading

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Summary:

Sell OTM Call Spread

A great strategy when you’re “slightly bearish” and want to make money even if you’re wrong a little bit. 

Sell a call option with a strike price higher than the current price of the stock.  Buy a call option with a strike price even higher than the strike you sold.

Example:  XYZ at $60.  Sell the $65 call, Buy the $70 call for a net price of $1.50 credit

You’ll profit $1.50 as long as XYZ is anywhere below $65 at expiration, but could lose $3.50 if it is above $70 at expiration.

 

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