For beginners, I usually recommend starting with a strike that has a delta around 20–30. This gives a good balance of premium and probability of profit. If you're using credit spreads, you want to be far enough out-of-the-money to give your trade room to breathe, but close enough to collect a decent premium.
That said, I don't only look at delta—I'll also check:
Support/resistance levels
IV rank
Overall market trend
Let me know what you're trading and I can share a specific example!
Thanks for your reply. After reading your article, I decided to test the strategy using the SPY Aug05 610/609 bull put spread. Maybe was for today not very clever, we shall see.
Interesting article, thank very much. But which strikes do you advice? Do you only look at the delta < 20?
Thanks André! Great question.
For beginners, I usually recommend starting with a strike that has a delta around 20–30. This gives a good balance of premium and probability of profit. If you're using credit spreads, you want to be far enough out-of-the-money to give your trade room to breathe, but close enough to collect a decent premium.
That said, I don't only look at delta—I'll also check:
Support/resistance levels
IV rank
Overall market trend
Let me know what you're trading and I can share a specific example!
Hi Casey,
Thanks for your reply. After reading your article, I decided to test the strategy using the SPY Aug05 610/609 bull put spread. Maybe was for today not very clever, we shall see.
If we get a bounce could be amazing setup Let me know how it ends up for you!