Could you explain? 下星期希望VST開盤繼續掉，再開一組低的組合，比如說 145-135 （1:2） with $5 credit. 同時開一組call spread。目的是用這次的credit去cover call spread 的 premium。
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Below is an explanation of the combined trade strategy you described:
Strategy Overview
You’re expecting VST to continue falling next week. Based on that view, you plan to:
-
Sell a Lower-Ratio Put Spread (145-135, 1:2) with a $5 Credit:
- Structure:
- Sell 1 Put at the 145 Strike
- Buy 2 Puts at the 135 Strike
- Net Credit: You receive $5 upfront.
- Objective: This trade profits if VST stays above 145 (all options expire worthless) or falls gradually—ideally around 135, where your net long exposure from the extra put works best.
- Structure:
-
Open a Call Spread Simultaneously:
- Purpose: The premium you receive from the put spread (the $5 credit) is used to help finance (or “cover”) the cost of the call spread.
- Why a Call Spread? Even though you’re bearish on the stock’s near-term movement, you want some protection (or a hedge) against a sudden upward move. The call spread limits your potential loss on the upside while costing you a premium that is offset by the credit from the puts.
How It Works in Detail
1. The Put Spread (145-135, 1:2 Ratio)
- Expectations:
You anticipate that VST’s price will fall further. By choosing strikes at 145 and 135, you’re targeting a lower price range. - Mechanics:
- Short Put at 145: You’re obligated to buy the stock at 145 if assigned.
- Long Puts at 135 (x2): These give you the right to sell the stock at 135.
- Net Position:
Because you sold one put but bought two, you’re net long one put. This means if VST drops, your long exposure (from the extra put) will profit as the stock approaches 135. - Credit:
The combination nets you a $5 credit. This credit acts as a buffer against a moderate decline and reduces your overall cost.
2. The Call Spread
- Why Open a Call Spread?
While your primary view is bearish (hence the put spread), there’s always a risk that the stock might bounce back unexpectedly. To hedge this risk:- You open a vertical call spread (for example, buying a call at one strike and selling a call at a higher strike).
- Financing with the Credit:
The $5 credit from the put spread is used to help pay for the premium of the call spread. This lowers your net cash outlay, meaning you’re not paying as much for the upside protection. - Result:
If VST moves higher unexpectedly, the losses on your put spread can be partly or fully offset by gains in the call spread. Conversely, if VST falls as expected, the call spread expires worthless and the credit from the puts adds to your profit.
Overall Objectives and Risk Management
- Primary View:
You expect VST to fall further. The put spread is set up at lower strikes (145-135) to take advantage of that decline. - Hedging the Upside:
The call spread is your insurance against a surprise rally. It ensures that if VST unexpectedly moves higher, the loss on the put side is limited. - Net Cost/Reward:
Because the put spread delivers a $5 credit, you use that to cover part (or all) of the call spread’s premium. This helps reduce the net cost of the overall position, effectively making your trade cheaper to run. - Risk/Reward Balance:
- If VST Falls as Expected: The put spread gains value, and both spreads might expire near your target range, maximizing your profit from the credit.
- If VST Rallies: The call spread will start generating profit, offsetting losses from the put spread, so your downside on an upward move is controlled.
