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Jim thanks for the example. Could you explain why you chose those strike prices?LeeI'm looking at Whole Foods (WFMI) right now for a bullish trade. This is a blue chip company that has declined in value to a support area in the low 40s. I could sell a May 45/40 put spread for $1.75 -- sell the 45 put for 2.95 and buy the 40 put for 1.20. Breakeven is 43.25. Risk is 3.25, which is the difference between the strikes minus the credit received (5.00-1.75).The same trade would be to buy the May 40/45 call spread for 3.25 -- buy the 40 call for 6.85 and sell the 45 call for 3.60. Breakeven is 43.25. Risk is the price of the call spread of 3.25.Profit potential is 1.75/3.25 = 53.8%
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