BA bull put spread: credit, risk, strikes

You are still selling downside — just not all of it. The long $200 put cuts the tail off below that level, which is why this needs $384 of buying power instead of the $20,500 a cash-secured put would tie up.

Above $205 at August 28, 2026, both puts expire worthless and you keep the full $116. Below $200, you lose the maximum $384. Breakeven is $203.84.

Return on risk is 30% for 27 days — 408% annualized. That headline is the reason people prefer spreads to cash-secured puts, and the reason spreads blow up accounts: the same capital supports several times the notional risk.

The risk is leverage, not the structure. $384 per spread is small; the temptation to sell ten of them because the buying power allows it is how a 73%-win-rate trade produces a losing year.

Early assignment on the short leg leaves you long 100 shares plus a long put — a synthetic call, not a disaster, but a position you did not choose and one that requires $20,500 of cash on Monday.

The structural problem with short premium is not the loss rate, it is the loss SIZE. A long run of small wins funded by an occasional large loss looks like skill on a monthly statement and like variance on a five-year one.

The elevated implied vol on Boeing is not a mispricing waiting to be harvested; it is a market correctly charging for a distribution with a fat left tail and no calendar. Most short-premium frameworks assume the risk arrives on known dates and can be avoided by choosing an expiry. That assumption does not hold here, which is why the credits stay rich and why naked short premium is a poor idea on this name specifically.

BA's Aug 28 strikes are $5 apart near the money (2.31% of spot). That is a coarse ladder: one rung is a large fraction of the implied move, so precision on the short strike is an illusion. 5.8k contracts of open interest on Aug 28 is thin, and a structure that needs four separate fills will pay for it. 15 strikes on that expiry — 36% of the board — carry prints that agree with their own implied volatility and hold up across the ladder, and those are the strikes priced here. Adequate but not deep; the usable ladder is short, and wide condors here are wider than the book really supports.

The surface is close to flat: only 1.1% between the 25-delta put and the 25-delta call. A flat skew means the usual put-side pickup is not there, so the case for selling downside rather than upside on this name is weaker than the habit suggests. The term structure is flat inside 1.5% between the two captured expiries, so there is no calendar edge to harvest and no event visibly priced into one month over the other.

At 34% ATM implied vol, the Aug 28 options are pricing a one-standard-deviation move of $20.15 over 27 days — roughly −9.3% to +9.3%, or $195.99 to $236.29. A short-premium structure here is a bet that 9.3% over 27 days is more than BA will actually use. That is the thesis, stated honestly.

The mistake this name punishes hardest: Assuming the risk lives on the earnings date. On Boeing it lives on every date.