AppLovin Options: Why This Bull Put Spread Can Earn $160

A bull put spread on AppLovin (APP) can offer a defined-income opportunity for traders who are moderately bullish or neutral on the stock. In this strategy, an investor sells a put at a higher strike while buying a put at a lower strike, collecting a premium that represents the maximum potential credit — in this case, $160 — if both options expire worthless.

The appeal of the bull put spread is that it limits both upside and downside: the premium received is the most you can gain, while your maximum loss is capped by the difference between strikes minus the net credit. That predictable risk-reward profile makes the spread attractive to option sellers who want income without unlimited downside exposure.

Risk management remains essential. The original commentary recommends placing a stop-loss if the share price breaks below 700. Using a stop-loss or predefined adjustment plan helps protect capital and prevents a small unfavorable move from turning into a larger, emotional decision. Traders should determine their stop level based on position size, portfolio risk tolerance, and how close the trade is to option expiration.

Before entering the trade, confirm implied volatility, time to expiration, and liquidity at the chosen strikes. Higher implied volatility can boost the premium collected but also signals greater market uncertainty. Ensure the options you choose have adequate open interest and tight bid-ask spreads to avoid execution slippage. Consider rolling, buying protection, or closing the spread early if market conditions change materially.

Tax treatment and margin requirements differ by broker, so factor these into overall trade profitability. Document your exit rules: whether you’ll close at a percentage of the credit received, if the underlying hits the stop level, or if you will allow the position to remain through expiration.

In short, a carefully structured bull put spread on AppLovin can produce a modest, defined credit such as $160 while keeping downside limited. But disciplined risk controls — including the suggested stop-loss beneath 700 — and attention to volatility and liquidity are critical to executing this options income strategy successfully. Source: Investor’s Business Daily.