Market has dropped significantly in the last couple of weeks with a large number of distribution days. So my near term outlook is bearish for the market. The SPY is around $175.20 right now. I felt it was not a good time to buy straight puts since SPY already dropped below major support level around $177.5. As VIX reached 19.60 which was close to the high of last 6 months, I decided to sell a few bear call spreads.
I played with the March Quarterly $180/182, $180/183 & $180/184 in the TOS analyzer and found the 1st two spreads had similar return on margin around 30% while the last spread had a ROM of 27%. So I sold MarchQ $180/183 bear call spreads with a credit of $0.87. The Delta of short strike $180 was around 0.3.
According to the analyzer, the ITM probability of the short strike one month later is 26% and at March 31 is about 33%. I'll treat this trade as a directional trade with some wiggle rooms. If 80% of profit is reached, I'll close the trade. If the trade lasts 30 days, I'll review it and try to close it. In case the market starts to rebound, I may close the trade when SPY reaches $181 area.