Max Profit exceeding max loss on a cash secured put?
By - unethicalpancakes
Your max loss includes the premium you receive
It isn't a thing. Either you are not multiplying the strike price by 100, or you are looking at an option with extremely low liquidity and you are seeing an ask that is nonsensically high because there is no other open interest.
First, max loss is the total you can lose above the credit taken in.
The second is that any trade that has a high max profit with a low max loss usually means the max loss is very likely and the max profit is very unlikely. Find some training on options probabilities . . .
The max loss quotes includes the premium you receive. Meaning if you receive premium of $100, you could lose $110, so the broker displays max loss of $10.
Whats the ticker ? Premiums cant be more than the price of the shares.
Post it so we can pick it apart
You did not find a billion dollar hack, if that's what you hoped.
Right now for Oct 1 (14 days out) on BB you can:
* buy a $9 put
* sell a $10 put
* sell a $10 call
* buy an $11 call
A (not very traditional) iron condor of sorts, and for this you receive a .75 (or $75 total) credit. This shows a max loss of $25, even though the strikes are $1 wide (or $100 total). Why is that? You are receiving an initial credit of $75, but you could then lose $100 on the trade, and at the end of it all you're $25 worse off than when you started.