With this selection, one can analyze vertical bull or bear spreads (either for debits or credits). A vertical spread is one that uses two calls with the same expiration month but different striking prices. It could also be established with puts, of course. Whether puts or calls are used, the following statements are true:

1. if a lower strike is purchased and a higher strike is sold, that is a bullish spread

2. If a higher strike is purchased and a lower strike is sold, that is a bearish spread

In PowerAnalyzer service we provide you with the unique capability to customize your search for the best Spreads.

By clicking on the drop down menus below you can see all the choices available for your customizable searches.

Parameters

1. Select SPREAD Type
Bull Put Credit Spread – sell the high strike, buy the lower
Bull Call Debit Spread – sell the high strike, buy the lower
Bear Call Credit Spread – buy the high strike, sell the lower
Bear Put Debit Spread – buy the high strike, sell the lower
2. Set Underlying Price Range
Select Underlying Type (Stocks or Index are your only 2 choices)
Set Price Range (10 < Stock < 100  Stocks between $10 and $100)
3. Select Volatility and Time
Select Volatility to be used in calculations (default is 1 Day Implied Volatility, but you can change it to 5 Days, 20 Days or 100 Days Statistical Volatility.)
Number of Days to Expiration defines, which expiration months will be used.
4. Primary Criteria. Choose one of the following five. "Estimated return" is always a safe choice.
Estimated Profit/Loss - Profit/Loss weighted by probability of each Profit/Loss happening.
Estimated Return - Estimated Profit/Loss as a percent to investment. Investment is the total debit for debit spreads, and for credit spreads the investment is the difference in the strikes less the initial credit received.
5. Secondary Criterions
Probability of Success - Probability that Profit would be greater or equal 0. Set the Probability that you required.
Option Price - Set the price range for the Options.
6. Customize Your Report
Sort By - Defines the field that final Report will be Sort by. "Prime criteria" is usually your best choice, since that is what you selected for your Primary Criteria.
Sequence: Ascending or descending sort.

A sample "Spread Report" is shown below. A Bull Put Credit Spread report was selected for this example. This was run using the default parameters, except for the fact that the "Primary Criteria" was set to "Estimated Return." The "Probability of Success" was set to 50% (the default). Note that the output includes a printout of all of your selection criteria before giving you the individual spreads that is has found.

The Spread Report should be viewed very carefully. In some cases, market makers do not update the bids and offers of options that are deeply in- or out-of-the-money, and thus a spread may look over attractive. Many of these could be eliminated just by looking at current prices and seeing that the credit cannot be achieved with actual prices. Again, remember that something that looks "too good" is probably not attainable – there is no free lunch on Wall Street.

Sell

Buy