[mrbaseball]

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are you saying to write an october put at 105 and buy a july/august put at the same strike price?

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No [img]/images/graemlins/smile.gif[/img] Actually I am saying the opposite. You would want to sell (write) the July and buy August or sell (write) the July or August and buy the October. You would want to do this strategy at the same strike price.

Basically you want to short (write) the option strike that you think you are going to in the nearer term expiration. This will maximize time decay if you are correct and the stock does indeed go to the general area of the strike you choose. Buying the later expiration option is your catastrophe protection. The later expiration will profit both from the directional move (assuming you are right) and a probable volatility increase. All the while the nearer term option will be rapidly decaying to possible worthlessness.

But like I said an outright option is more profitable if you are right in your analysis with optimal timing. That's hard to come by though [img]/images/graemlins/smile.gif[/img] The spread has a lot more wiggle room meaning less risk. With a long put only near term strategy you have to go down real soon and real hard or you will wither away. You can be wrong (to a point) or too early with the calandar spread and still possibly make money or break even. The real risk of the put calandar I have proposed would be a slow (or even fast) up move with decreasing volatily. With a fast move (depending on how far) you may still even be able to salvage something if volatility firms. Blowing through the downside very hard could also be painful if it moved too far through your target strike. But these are debit spreads and you really can't lose more than you pay for them. They don't have the unlimited profit potential of an outright option. If the iphone started causing brain cancer and Apple went to zero unhedged long puts would be way better. But in a realistic scenario the spread offers a much better risk/reward situation.

Other ways I would look to play this would be with a long put butterfly or condor. These again would involve picking a general target that you thought had a decent chance. You could also buy put verticals or sell call verticals or even both if you were convinced there was no upside [img]/images/graemlins/smile.gif[/img]