An IRA has more stringent capital requirements, meanings that some strategies or stocks can be out of reach for some people.
Luckily, by employing options, we can achieve the same directional exposure as stock with only a fraction of the capital.
Instead of buying 100 shares of SPY, which would run us $27k, we can sell 5 put spreads. This will give us the same share exposure (100 shares) as the stock, but cost us only $4k.
Additionally, selling put spreads increases our probability of success beyond the 50% that you get with buying stock.
The downside is that your reward is defined by the credit you receive, and therefore this strategy should be used if you are bullish in the short term, not the long term.
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