Puts are expensive.

I was looking at placing a bull put spread under my bear call spread to finish the iron condor setup and see that the put side is very pricey to setup. Basically in order to get a decent credit I need to really have some space between the put sold and the put bought which drives the risk up very quickly.

I set my call spread at $3 and the yield is over 12% for the trade based on $1000 risked over 4 contracts.

A put spread of $5 today would yield just over 4% for the trade based on $2000 risked over 4 contracts.

In order to bring the absolute dollar return near my idea of a good time I would need to run 6 contracts for a total risk of $2,900 but still with a 4.3% yield. But, seeing as I am looking for low risk trades I like 10% or better yield with a small spread.

So, I will concentrate on the call side. While setting up an iron condor I now see why some look at a ratio rather than a straight 1:1 calls vs puts in order to keep the absolute return even. I also see why Optioneer gets antsy over the put margin as opposed to the call margin, besides being a faster move when a price breaks down it is a larger overall risk.

Oh, well. At least this makes setting up trades easier.

Jeff.