F bull put spread: credit, risk, strikes

You are still selling downside — just not all of it. The long $13.5 put cuts the tail off below that level, which is why this needs $37 of buying power instead of the $1,400 a cash-secured put would tie up.

Above $14 at August 28, 2026, both puts expire worthless and you keep the full $13. Below $13.5, you lose the maximum $37. Breakeven is $13.87.

Return on risk is 35% for 27 days — 475% 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. $37 per spread is small; the temptation to sell ten of them because the buying power allows it is how a 71%-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 $1,400 of cash on Monday.

Liquidity is a risk, not a convenience. The moment you most want out of a short-premium position is the moment the spread is widest, and the exit price you modelled at mid will not be available.

Ford is a dividend trade with an options overlay, and getting the order of those two right is the whole game. The yield is large enough that an ITM short call the night before an ex-date is a genuine early-assignment risk rather than a textbook footnote — the extrinsic value on a low-priced, low-vol contract is often less than the dividend, which is exactly the condition that makes exercise rational. Check the ex-date before every write, not once a year.

F's Aug 28 strikes are $0.5 apart near the money (3.41% 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. 11k 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. Liquid near the money, and the penny increments on cheap contracts mean the spread is a large fraction of the credit.

Skew is ordinary — the 25-delta put implies 3.0% more vol than the 25-delta call, about what an equity surface looks like when nothing unusual is being priced. Neither side of the chain is being singled out, which is the condition under which a symmetric structure like a condor is actually symmetric. 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 35% ATM implied vol, the Aug 28 options are pricing a one-standard-deviation move of $1.38 over 27 days — roughly −9.4% to +9.4%, or $13.3 to $16.06. The structure above sells the part of that distribution the market thinks it will not reach. Whether that is a good trade is entirely a question of whether 9.4% is too much or too little for F over 27 days — the delta table cannot answer that, and neither can we.

The specific way people lose money on F: Getting called away the day before the dividend and discovering the yield you were writing calls to enhance is the yield you just forfeited.