Strategy - DIAGONAL SPREAD (details below)

• bullish
• bearish
  • very bearish
  • certain that the market will not rise
  • moderately bearish + fairly certain that the market will not rise
  • flat or mod. bullish in near-term (weeks) + bearish in longer term (months)
  • hold stock and bearish
• neutral
• volatile

Strategy Implementation
Sell a near-dated put option and buy a longer dated out-of-the-money put.

Upside Potential
Large, if the bought option is held after the short option expires (the position then becomes a straight-forward buy put). If the position is closed at expiry of the near option, maximum profit will accrue if the market is at the level of the sold strike.

Downside Risk
Limited to the difference in strikes plus/minus the initial debit/credit when establishing the spread.

Margin
Yes, but limited.

Comment
There is a risk of the sold options being called (i.e. being exercised).