Hi all - I have a small portfolio and am trying to make relatively safe investments with options trades. I'm not sure if this is too good to be true, as most things are... but I can't find a good piece of info on this. To me, it looks like debit spreads have a lower overall risk (and overall lower max reward) for options trades.
My question is - what is stopping the average joe from simply buying expensive credit spreads that are pretty "deep" in a safe area in the money and just selling it the next day/days for a small but easy profit? It seems that doing those trades can add up to pretty easy income. You avoid being flagged as a day trader, you avoid doing wash sales as long as you make a good pick, and it seems like an easy way to grow a smaller portfolio.
E.g. paying $500 for a contract with a max profit of $100 for example Apple. Yes you will lose the theoretical max profit if you just did a call option and the stock went up... but can't I just do debit spreads and be safer at the cost of a lower max?
[link] [comments] https://www.reddit.com/r/stocks/comments/14czt65/call_debit_spreads_what_am_i_missing_seems_safe/
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