Retail investor: I trade credit spreads. Defined risk, I always know my max loss.


Me: & what's your max GAIN?
Retail investor: Capped too. That's the tradeoff.
Me: So on a company you're bullish on, you bought a leg that caps your own upside... to hedge a drop on something you wanted to own anyway?
Retail investor: ...I never framed it like that.
Me: You're paying to hedge against your own conviction. If you're bullish, BE bullish. I sell portfolio secured puts & buy long duration calls to magnify the best setups. No cap on the good stuff.
Retail investor: So stop paying to limit my own winners?
Me: Defined risk sounds smart. Capping your upside on great companies isn't.
Don't pay to cap your own upside & call it "smart risk management"...
A spread is betting bullish & bearish on the same company at once.
Pick a side. Sell portfolio secured puts & let the winners run.
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