I don't think you can really get an apples to apples comparison between a naked put trade and a put credit spread trade using percentage of return. There are too many factors.
Today when SPY was at 125.23, you could've put on a put credit spread using weeklies. You could've sold a 125 / 120 put spread for 1.23. Your max profit is 1.23 and your max loss is 3.77. So if you end the trade with max profit, what is your return? 1.23 / 3.77 or 32.6%? Do you divide your profit by the margin you tied up instead of dividing it by 3.77? If I sell a naked 125 Put, how do I compare my return to yours? Like I said, too many variables for my tastes.
I sold 125 weekly Puts today for 1.81 just before the close. To put on a 125 / 120 spread I would've had to pay 0.58 for the 120 puts. All I'm doing is buying insurance against to cover me against a really big drop and for me, that's too expensive when using an index that doesn't drop 4% or more very often in one week. Like I said, if you're talking about individual stocks, its a whole different ballgame.
Today when SPY was at 125.23, you could've put on a put credit spread using weeklies. You could've sold a 125 / 120 put spread for 1.23. Your max profit is 1.23 and your max loss is 3.77. So if you end the trade with max profit, what is your return? 1.23 / 3.77 or 32.6%? Do you divide your profit by the margin you tied up instead of dividing it by 3.77? If I sell a naked 125 Put, how do I compare my return to yours? Like I said, too many variables for my tastes.
I sold 125 weekly Puts today for 1.81 just before the close. To put on a 125 / 120 spread I would've had to pay 0.58 for the 120 puts. All I'm doing is buying insurance against to cover me against a really big drop and for me, that's too expensive when using an index that doesn't drop 4% or more very often in one week. Like I said, if you're talking about individual stocks, its a whole different ballgame.