Optionalysis: Introducing the Debit Put Spread

2 comments Written on January 24th, 2014 by
Categories: Options, Premium

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Tatamotors shows signs of a short term downmove to the 375 levels. This is useful for a put spread, which we’ll introduce in this article. First, the reasoning.

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About the Author:
The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company. Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with him at deepakshenoy@capitalmind.in.

2 comments “Optionalysis: Introducing the Debit Put Spread”

Hey Deepak,

Thanks for simple explanation.

Just wanted to understand that the only reason to buy a spread (any spread) is to reduce a risk, right ? –
Because simply going by the charts, only buying 380 put seemed logical. If stock expires at 365, one actually ends up limiting the gains.

Seems good in hindsight :) I would have bought the put but it wasn’t apparent there wouldn’t be a bounce. So I recommended a hedge to cut the cost down…