I am just getting started and want to make sure I am understanding the strategy.
Sell to Open AAPL Feb 90/85 Bull Put Spread @.90
Close at 0.25
Add at 1.30
Add at 1.70
from the trade the idea is sell the feb90 put, buy the feb85 put at a net of +.90 on the spread.
then if the net drops to .25 we close out or when the net increases to 1.30 we add to our position and add again if the net cont. to go to 1.70
Then if aapl does get our strike price then roll them down and out (which would likely be at a loss (which the buffer is the initial +.90 that we started.
Why did we target 85/90 to start? was it because it was outside of the 5-8% that aapl has shown to drop? was there a delta target?
Thanks for any and all help,
Chris