[ehsync]

Depends on the strategy.

Buying out of the money options is a lottery ticket, where you pay a relatively small premium with the chance of a large payout if the underlying moves favorably or volatility increases. Your potential loss is limited to the premium you paid for the contract.

In the case of Boeing, you're not guaranteed to profit when owning puts even if the stock drops if time decay (theta) saps your premium at a rate faster than the change in underlying price relative to the strike of your option (delta), or if volatility decreased rapidly after the initial reaction to the news (vega).

Selling naked options allows you to collect the premium up front but exposes you to the risk of huge losses, in fact unlimited losses when selling calls.

Credit spread trading [0] also allows you to collect premium up front, but your risk is defined as you buy a cheaper option to hedge the naked position you created by selling the short option. The compromise is that your maximum profit is capped. This is akin to selling someone an insurance policy, with the stock as the underlying asset being insured. If you were bearish on Boeing and didn't expect it to rebound anytime soon, selling a call credit spread would be a good strategy to profit from your sentiment without taking on too much risk.

[0] https://omnieq.com (Disclaimer: This is my product)

[TheTank]

It is a good strategy (and an interesting product). The execution side might be complex for retail traders. Execution is particularly important because although you get a cheap structure (selling one leg, buying the other), you end up crossing the spread twice.

This sort of trade is usually done OTC or alternatively using a contingent algorithm (wait passively on one side for one leg, and fire the second leg automatically as the first leg is filled) which allows going from paying 2X spread to 0 - but the latter has the tradeoff of taking longer and potentially missing the opportunity.

I know they are sometimes called like this, but I find the naming "credit spread trading" confusing. Are these strategies different from collars? I traded credit in the past, and my immediate understanding of "credit spread trading" in this context is shorting bonds of Boeing and buying treasuries (or trading US rates) for example. It would also be a valid strategy in this case that would use credit and rates instrument as a vehicle rather than equity instruments, but not accessible to retail traders.