bull put spread

How to Find the Best Bull Put Spreads

Do you know how to look for long signals that indicate a stock has bottomed out?

Today SlashTraders will show you how to use our unique trading system and the Bull Put Spread Screener to find heavily undervalued stocks that you can buy the dip by trading high probability and high return bullish options.

What Is a Bull Put Vertical Spread?

A Bull Put Vertical Spread works by combining a short Put and a long Put at different strike prices that expire at the same time. The Put Vertical Spread is profitable if the underlying price goes up before the option expires.

Let's review the profit analyses of selling and buying Put options. We receive a premium when we short a Put option. If the underlying price goes up we make a profit.

aapl sell naked put
A short Put option can profit when the stock price goes up.

Although a Naked Put is easy to execute, if the underlying price goes down, the maximum loss is unlimited.

We pay a premium when we long a Put option. If the underlying price goes down we make $100 for every $1 drop.

aapl buy put
A long Put option can profit when the stock price goes down.

But if the underlying price goes up instead, the value of the Put option expires worthless.

When we combine a short Put and a long Put at different strike prices we create a Put Vertical Spread. Since we want to trade bullish, the strike price of the short Put would be higher than the long Put.

aapl sell put spread
Combine a short Put and a long Put at different strike prices to create a Put Vertical Spread that profits from a bullish trend.

Compare this to a short Naked Put, a Bull Put Vertical Spread can limit the maximum loss if we are wrong about the direction.

Why Bull Put Spread?

If we are confident about a bullish outlook, trading a short Bull Put Spread has higher leverage than buying stocks.

We can use AAPL to compare the differences between trading a Bull Put Vertical Spread that expires next month, and buying stocks. An ATM Bull Put Spread has a 54% chance of success, while buying stocks has a 50% success rate.

sell put vertical spread vs stock
If AAPL price goes up by 10% in 41 days, a stock trade will earn 10% profit, while a Bull Put Spread gains 73% return.

If AAPL price goes up by 10% in 41 days, we gain 10% profit from a stock trade, while a Bull Put Spread gains 73% return.

If we are wrong about the price direction, the Bull Put Spread loses 100% of the Buying Power.

What Are the Key Points to Profitable Bull Put Spreads?

When selling Put Spreads, we have a positive delta, so we want the stock price to go up to decay the option value, then we can buy to close the trade.

Delta is the changes to options price with respect to changes in the underlying price.

A positive delta trade is profitable when the stock goes up, and the trade loses when the stock price drops. If the stock price stays above the short Put strike, we can wait for the options to expire worthless for a profit.

Maximum loss of a Bull Put Spread = width of the Put strikes x 100 - premium collected

Buying Power = maximum loss

So when the Put strikes' width stays the same, a higher delta leads to a higher premium, lower maximum loss and higher returns.

Let's look at two AAPL Bull Put Vertical Spreads with the same $5 widths.

sell put spread delta
The Bull Put Vertical Spread with a more positive delta has a greater Return on Capital.

When the short Put is at 0.50 delta, the maximum return is 73%. When the short Put is at 0.20 delta, the maximum return is only 15%.

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How to Use the Bull Put Spread Screener to Find Bottom Out Bullish Trades

The Bull Put Spread Screener uses historical chart analysis to find bottom out stocks that have a high probability of an upward correction that we can sell Bull Put Spreads to profit from the dip.

We want to find heavily undervalued, bottomed out underlying that have a high probability of going up.

  • Long Days indicates the number of trading days since the most recent bullish signal, based on technical analysis. A small number means we can enter the trade at the start of the bullish trend.
  • Long Signal Price shows the recent dip based on technical analysis. We can be confident the stock price will not fall below this price level in the short term.
  • Fundamental analysis shows us the Fair Value of the underlying. Then it compares with the Last value to find the potential Upside. The higher the Upside, the greater the confidence of the stock being undervalued.

We can combine the 3 bullish signals in the screener to execute high probability bullish trades. The screener also helps us find high Return on Capital 0.50 delta ATM Bull Put Spreads.

bull put spread screener
We sort the stocks by Long Days to find the start of bullish trends, then find undervalued stocks with Upside.

Then we can use the Spread Details to find the ATM Bull Put Spreads with the respective Return on Capital.

The Best Bottom Out Bull Put Spread Right Now

Let's pick the highest probability and high return Bull Put Vertical Spread entry points.

By combining Long Days and Upside, out of all bullish stocks that started within 2 trading days, FB is extremely undervalued with 97% upside. So it has a high probability of a bullish trend.

fb bull put spread screener
FB is undervalued and trending up.

The FB price chart shows it reached a low point at Long Signal Price of $169 2 trading days ago, and has been bullish ever since.

fb chart analysis
FB reached the low Long Signal Price around 2 trading days ago, and has been bullish since.

Considering FB is heavily undervalued, we can be confident of a bullish outlook.

We can sell a FB Bull Put Spread option that expires next month. If the Meta stock price does not fall before expiration, we can profit 103% from the trade.

fb bull put spread roc
A FB Bull Put Vertical Spread that expires next month has a maximum return of 103%.

Now you know how to use the Bull Put Spread Screener to find bottomed out stocks that are trending upwards. Remember to use the screener often to find the best bullish Put Spreads to sell and profit from the rising trend.

How to Roll a Bull Put Vertical Spread?

If the stock price is down with less than 14 days to expiration, we can roll the losing Put Vertical Spread to next month and wait for the stock price to rise in the future.

If SHOP's Bull Put Credit Spread is losing due to a drop in stock price while we maintain a bullish outlook, we can roll the contract forward.

shopify put spread loss
Stock price falls causing the Bull Put Spread to lose.

When rolling a Bull Put Spread, we need to close the existing Put Credit Spread, and sell to open a new Put Spread that expires next month.

roll shopify put spread
Close the current Put Credit Spread and sell to open a Put Spread that expires next month.

We can consider widening the Put Spread to increase the premium received to offset our existing losses.

shopify put spread next month
A longer date Bull Put Credit Spread that uses a longer time value and wider strike prices to offset the loss.

As a result, we create a longer date Bull Put Credit Spread with additional credit from longer time value and wider strike prices. Then we can wait for the SHOP stock price to bounce back in a bullish manner and profit from the new trade.

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23 thoughts on “抄底股票怎麼看?教你看漲股票再用選擇權獲利”

  1. Hi, thanks for sharing this. I am also exploring this strategy to compliment other strategies. One question on the Baba example, from the screenshot, the sell put premium is 9.75 and buy put premium is 10.40. With this, isn’t that it’s loss of 1.17(9.75 (premium we gotten from sell put) – 10.40(premium we paid to buy put)?

    1. You are right that the quote of the short Put premium (9.75) seemed to be lower than the long Put (10.40), leading to a theoretical 0.65 debit.
      But the actual calculation of the combined trade, due to the bid-ask spreads, the platform still gave me a positive net credit of 1.17 (as seen in the bottom right Order Type as Net Credit).

    1. We believe the best stocks for bull Put vertical spreads are whichever stocks that satisfy both “undervalue” criteria:
      Fundamentally at least 30% undervalued, as described by the Fair Value and Upside columns of our scanner.
      Technically undervalued as our Trends and Long Signal columns indicate a bottomed out event has happened recently.

  2. CHENG CHIEN-YU

    請問一下, 從10/28. 你交易的BUD 股價已經到了 63元, 但是你交易帳目上的 put vertical (55/56) P/L day (-126/98) 是賠錢28元. 不是股價大於56元就會賺錢了嗎?看不懂 請指教。謝謝

    1. Hello,我們列出了兩個P/L,差別如下:
      P/L Open – 從交易開始時到現在的獲利/虧損
      P/L Day – 今天獲利/虧損
      如你提到的在10/28時BUD是63元,55/56 Put Spread交易應該要是正的
      從P/L Open看是正的沒錯(-278+376=98)獲利了98元
      你看到的P/L Day虧損28元是因為”當天”的股價波動造成了”當天的虧損”
      不過從交易開始時P/L Open累積是正的,所以沒錯

    1. 是啊,交易選擇權的槓桿比股票高很多
      不過要注意如果股票趨勢預測錯誤,使用的購買力會歸零
      所以我們綜合基本面分析和技術分析找到最高機率的抄底股票才會進場

  3. Wait, are you saying the bull put spread screener can find bottom out stocks consistently?
    I can’t wait to check it out!

  4. 我有兩個問題
    1做的是高價的sell put ,已經直接比買現股貴了2. BABA 41天後截止的價平看漲Put垂直價差有最高31%的投資報酬率。這個31%上怎麼算出來的呢?

    1. 謝謝您的問題:
      1. 如果覺得股票抄底了,接下來看漲,賣比股價高一點點的Put價格比較好,可以降低整個交易的buying power,降低最大損失,增加投資報酬率
      2. 文中賣的Bull Put Spread收入是$1.17×100=$117,使用$383的buying power購買力,如果41天後股價在$175以上,賣出的Bull Put Spread會失效,收入就是$117,投資報酬率117/383=31%

  5. 感謝分享如何搜尋抄底的股票
    已訂閱會員,很期待使用看漲清單交易上漲的機會

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