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09

October, 2019

Sell OTM Put Spread — Bullish Strategy For Earnings Trading

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Summary:

Sell OTM Put Spread

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

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

Example:  XYZ at $60.  Sell the $55 put, Buy the $50 put for a net price of $1.50 credit.   

You’ll profit $1.50 as long as XYZ is anywhere above $55 at expiration, but could lose $3.50 if it falls below $50 at expiration.

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