One of the reasons why “bottom fishing stocks” is the best time to use this strategy is that, due to the huge stock selloff, the implied volatility in the put option prices will normally be high. This means that the near-money options that you’re selling will be at inflated prices, thus bringing you a greater credit for the transaction.
You get paid a handsome sum for simply waiting for the stock to fall further – if it does.
Another Huge Advantage
Instead of creating a vertical put credit spread for bottom fishing stocks as outlined above, you could choose instead to make it a diagonal spread. This means that you would sell the near month put option and buy a long-dated put option at a lower strike price.
You may be exercised on the near month option and own the 500 shares, ready for a covered call strategy, but you will also now have a long-dated put option at a lower strike price, over which you can continue to sell more put options each month, or under which you can create a debit spread, bringing you even more income.
Details of this strategy along with so many more powerful secrets about the art of adjustments for options trading profit are outlined in the Trading Pro System.