OTM bear put

CFA Level III
#1

I am aware of bear spread but when I encountered a problem where the higher strike still happens to be ATM option for OTM bear spread.

Any clue as to why?

#2

They really, really, really don’t want to lose any money if the price of the underlying increases; i.e., if their view is wrong.

Note that historically CFA Institute has always used one OTM option and one ITM option for bear spreads and bull spreads. Always.

1 Like
#3

Thanks Bill!!

#4

My pleasure.

By the way, the 2023 exam #5 will be up on the website in the next day or two.

2 Likes
#5

Thanks for the update.

Whether I pass or not, definitely learned a lot from you. Thanks.

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#6

My pleasure.

Glad to have been some help.

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#7

CFAI website? thought they only released two.