AAPL bull put spread: credit, risk, strikes

You are still selling downside — just not all of it. The long $290 put cuts the tail off below that level, which is why this needs $390 of buying power instead of the $29,500 a cash-secured put would tie up.

Above $295 at August 28, 2026, both puts expire worthless and you keep the full $110. Below $290, you lose the maximum $390. Breakeven is $293.9.

Return on risk is 28% for 27 days — 381% 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.

Between the strikes the loss scales linearly, so most of the damage happens fast when AAPL breaks $295. There is no assignment-and-hold escape hatch: the long put you own expires the same day.

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 $29,500 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.

The reference covered-call underlying, and the reason is boring in the best way: a low-20s vol that realizes close to where it implies, a dividend that makes the ex-date calendar matter, and enough open interest at round strikes that you can roll a position for years without ever touching a bad fill. The premium is not exciting; it is repeatable, which is what a covered-call underlying is for.

AAPL's Aug 28 strikes are $5 apart near the money (1.62% 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. 32k contracts of open interest on Aug 28 is workable around the money and thin in the wings — width costs more here than the ladder suggests. 18 strikes on that expiry — 41% 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. Penny-wide almost everywhere. If a spread will not fill near mid on Apple, the price is wrong, not the market.

Skew is inverted: the 25-delta CALL implies 1.7% more vol than the put. That is the market pricing upside risk above downside risk — a squeeze, a takeover rumour, or a crowded short. Selling calls into an inverted skew pays better than usual and is riskier than usual for exactly the same reason. 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 27% ATM implied vol, the Aug 28 options are pricing a one-standard-deviation move of $22.60 over 27 days — roughly −7.3% to +7.3%, or $286.31 to $331.51. 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 7.3% is too much or too little for AAPL over 27 days — the delta table cannot answer that, and neither can we.

What actually goes wrong here, as opposed to in general: Writing calls into a September product cycle at the same delta you used in July. The distribution changes; the delta table does not tell you that.