Opened an AAPL Oct 16 300/295 bull put spread (71 DTE): STO 1× AAPL 300P at $7.975/share (live chain mid of $7.85 bid / $8.10 ask), BTO 1× AAPL 295P at $6.425/share (live chain mid of $6.35 bid / $6.50 ask). Net credit $1.55/share ($155/contract). Max profit $155 above $300 at expiry; max loss $345 below $295. 1-contract sizing. IV ~24.7% at the short 300P (~25.0% at long 295P, mild put skew). Short-leg delta ~−0.29 → short-leg POP ~71%; net structure delta +0.03. Spot $312.46.
Why This Structure
A medium-dated bull put spread on AAPL at 71 DTE is a "premium-collection pin" structure on a single mega-cap name: defined risk, defined reward, capped downside, and a natural profit-take if AAPL stays above the short strike. The 4% OTM cushion (≈$12.46 below spot) is meaningful for a name with AAPL's realized vol (30-day historical ~22%); the 24.7% IV is consistent with AAPL's elevated implied surface and gives a richer premium than an index spread at the same delta. Equity options carry early-assignment risk on the short put (no cash settlement like index products), but the 4% OTM cushion and the 13.5-point distance to the ex-dividend date in early November make early assignment unlikely until late in the trade.
Thesis
- Why AAPL, why now: AAPL is the largest-weight single name in most long-only portfolios and the cleanest single-name proxy for U.S. mega-cap tech earnings momentum. At spot $312.46 with the stock sitting near its 200-day moving average and ~14% off its July 2025 all-time high, the trend is constructive but the path has been a slow drift rather than a directional push. The 71-DTE Oct 16 expiration lands after the Aug 28 Q3 earnings print but well before the Q4 print — collecting premium through the post-earnings drift with defined risk is the cleanest expression of the "no downside surprise in the next 71 days" view. The 24.7% IV is consistent with AAPL's surface; the post-earnings premium reset in late August should compress realized into implied and produce a positive vega tailwind as the position ages.
- Why bull put over alternatives: A naked short put at 300 would collect ~$7.975/contract but expose the position to $30,000+ of max loss (essentially unlimited below zero). The bull put spread caps the loss at $345/contract in exchange for capping the profit at $155/contract. The risk/reward tradeoff is appropriate for a single-name premium-sale thesis: the desk is being paid to be wrong on one specific name, with downside capped at 2.2× the credit collected. A bull call debit spread at the same strikes would cost ~$3.10/share in debit with max profit $190 and max loss $310 — but a debit spread requires the market to move into the profit zone and doesn't pay for waiting. Collecting the credit (with a defined-risk cap) is the cleaner expression.
- Why not SPY/QQQ: Selling premium on the index caps exposure to single-name idiosyncratic risk (earnings, product news, regulatory action) but also caps the IV premium AAPL offers at the surface. AAPL's 24.7% IV is ~10 points above SPY's typical 14–15%, and the trade collects ~3× the credit per dollar of width that an equivalent-delta SPY spread would. The structural difference: SPY is cash-settled equity (dividend-treated for early assignment), while AAPL is a true equity option with full early-assignment risk on the short put. The 4% OTM cushion and the time value remaining (71 DTE) make early assignment unlikely until late October — well past the natural 50%-profit-take window.
- Why not naked put ratio: A 1×2 put ratio at 300/300 would collect more premium but introduce unlimited risk below 295. The bull put spread's symmetry (1 long below the short) eliminates the tail risk that defines ratio trades. For a single-name position with idiosyncratic risk (earnings, regulatory, antitrust), defined-risk is the default.
Risk
| Risk | Magnitude | Mitigation |
|---|---|---|
| AAPL closes below $295 at Oct 16 4:00 PM | −$345/contract (= full width − credit) | 1-contract sizing keeps total max loss at $345, well within per-trade and weekly risk budgets. |
| AAPL gap-down on Q3 earnings (Aug 28, 2026) | Single-name gap risk; 4% OTM cushion could be erased in one session on a 5%+ miss | Position is sized for a defined-risk outcome. If AAPL gaps below $295 post-earnings, the max loss is capped at $345 regardless of how far the stock falls. Close before earnings if the cushion is <2% (not the case at entry — 4% OTM). |
| IV spike (puts get richer) on equity sell-off | Long 295P gains less than short 300P loses in a vol spike → net negative vega on the structure | Structure has small net short vega (−$15/contract per 1% IV). At a 5-vol-point spike the structure loses ~$75/contract. Manageable but real; watch VIX and AAPL-specific IV intraday. |
| Early assignment on short 300P | If AAPL drops sharply and the short put goes deep ITM before ex-dividend, the short put could be assigned | 71 DTE at entry; early assignment on American-style equity puts typically only matters when the put is deep ITM and the time value is gone. The 4% OTM cushion and 71 days of time value eliminate near-term assignment risk. Monitor in the final 2 weeks if AAPL approaches $300. |
| Theta underperformance in a quiet market | Theta decay is concentrated in the final 30 DTE; if AAPL sits at $310–$315 for 50 days, decay works but slowly | Patience. The position is sized for a 30–50 day hold. If AAPL stays range-bound, theta compounds through October mid-month. |
| Single-name concentration | 1-contract sizing limits max loss, but AAPL correlation to QQQ means multiple AAPL-adjacent trades could compound | Single-name risk is real. Cap AAPL exposure at 1–2 open positions at any time; do not stack AAPL bull put with AAPL naked calls or other same-name structures. |
Position Payoff at Three Time Horizons
The chart above shows the position's P/L as a function of AAPL's price at three evaluation dates: now (entry, 71 DTE), mid-life (~36 DTE, after the first month of decay), and at expiration on Friday October 16, 2026 PM-settled close.
Read the chart:
- Spot $312.46 sits 12.46 points above the short strike 300P. The position is in the profit zone now (keep the credit if AAPL closes above $300 at expiry).
- Max profit plateau $155/contract opens at $300 and runs to infinity. Any AAPL close above $300 at Friday October 16 PM settlement expires both legs and produces the full credit.
- Max loss plateau −$345/contract holds for everything below $295 at expiration. Below the long strike, both legs are ITM and the position loses the full (width − credit).
- The transition zone $295–$300 is the only range where P/L is between the two plateaus: short 300P captures intrinsic dollar-for-dollar as AAPL falls through $300 to $295, while long 295P still expires worthless. P/L ramps linearly from +$155 at $300 to −$345 at $295.
Key levels on the chart:
- Spot $312.46 — current underlying, 3.99% above short strike.
- Breakeven $298.45 — AAPL needs to drop 4.49% from spot to wipe out the credit. The $12.46 cushion is the structural margin of safety.
- Short strike 300P — the position starts losing intrinsic per dollar once AAPL crosses $300; this is where the "now" curve turns down.
- Long strike 295P — the position stops losing at intrinsic-only once AAPL crosses $295; this is where the at-expiry curve plateaus at −$345.
- Max profit $155/contract — any AAPL close above $300 at Friday October 16 PM settlement.
- Max loss −$345/contract — any AAPL close below $295 at Friday October 16 PM settlement.
Trade details: 1 bull put spread · PM-settled (American-style equity, last trade day Friday 10/16 close) · width $5.00 ($300 short vs $295 long) · total credit $155.00 · entry Aug 6, 2026, mid-day (live chain quote) · management rule: 50% of credit ($77.50/contract to close) OR close by Wednesday 10/14 to avoid Thursday-Friday gamma risk · stop loss: 2× credit ($310/contract cost to close) OR AAPL trades below $295 at any point.
Greeks Snapshot (Black-Scholes)
| Greek | Per-contract value | Interpretation |
|---|---|---|
| Delta | +0.03 | Net long delta. Each $1 AAPL move ≈ +$3.04 P/L. Structure has very small directional exposure; short-put premium dominates. |
| Gamma | −0.06 | Slightly short gamma. Position decelerates as AAPL rallies. Manageable across the 71-day window. |
| Theta | +$0.41/day | Daily time decay works for the position. Most of the theta capture is in the final 30 DTE. |
| Vega | −$15.00 per 1% IV | Slightly short vol. A 5-vol-point spike (24.7% → 29.7%) costs ~$75/contract. Real risk in a single-name position; manageable. |
| Rho | +$4.50 per 1% rate | Modest rate sensitivity over 71 DTE. |
Numbers computed at entry spot $312.46, 71 DTE, IV surface anchored at 24.7%, r = 4.5%, no dividend yield adjustment (AAPL pays a dividend but the Oct 16 expiry is before the November ex-date). Per-contract = per-share × 100.
Intraday Setup (entry)
Pre-market context: Wednesday August 6, 2026. Overnight: U.S. futures modestly higher pre-open (+0.1% to +0.2%); AAPL has been drifting in a $308–$315 range over the prior two weeks. AAPL implied 1-day move (1σ) is ~$8.05 = 2.6% of spot. The 12.46-point cushion to short 300P is ~155% of one daily 1σ move — well outside overnight gap risk.
- Entry signal: AAPL spot was $312.46 with 24.7% IV at the 300P strike and 25.0% IV at the 295P strike. The put skew is mild (0.3 vol points across the 5-point strike spread), which keeps the spread credit at 31% of width. Entry triggered at $1.55 credit (above the 28% threshold for a credit spread at this IV).
- Execution: Manual limit order at the mid; filled at $1.55/share = $155/contract. Spread was $0.25 wide on the short leg and $0.15 wide on the long leg at the entry print; no slippage.
- Position size check: 1 contract × $345 = $345 max loss. Book-wide per-trade cap is 0.25% of NLV; per-week cap is 0.5%. At a $300k book, $345 is 0.115% of NLV — well under the per-trade cap. Sizing is conservative; capacity left for additional same-direction or different-structure trades.
Management Plan
- Open through Friday 8/8 (Day 1–3): Do nothing. Theta works for the position; the position has 71 days and 12.46 points of cushion. Spot $312.46 is well above short strike; the 24.7% IV has natural pull to 22–23% as the trade ages through mid-September if the market stays calm.
- Q3 earnings (Aug 28, ~Day 22): Watch the earnings print. If AAPL stays above $305 after the print, the position is unchanged. If AAPL gaps below $300 on a 5%+ miss, the structure caps the loss at $345/contract — the max-loss plateau is the floor. Consider closing before earnings if AAPL trades below $302 in the final 2 trading days before the print.
- Mid-September (Day 36–50): Watch spot closely. If AAPL stays above $305 through mid-September, the credit can likely be closed at 50% max profit ($77.50/contract to close) — preferred exit. If AAPL drops below $302 at any point, the trade is at risk; prepare to manage.
- Wednesday 10/14 EOD (Day 69): Force-close decision. If the position has not hit 50% profit-take and AAPL is still above $300, close at market to avoid holding into Friday close gamma. Do not hold through Friday morning unless AAPL is above $310 with the position already at 70%+ of max profit.
- Stop loss: 2× credit ($310/contract cost to close). Triggered if AAPL trades below $302 mid-trade with no recovery, or if VIX spikes above 22 intraday, or if AAPL-specific IV spikes above 30%.
Position Update Log
2026-08-06 (entry): Opened. 1 contract. IV 24.7%, 71 DTE, PM-settled. Spot $312.46. No updates yet.
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