The Best Vertical Spread Option Strategy 2020

What's The Best Vertical Spread Option Strategy ?

To get the transcript, go to: https://www.rockwelltrading.com/coffee-with-markus/whats-the-best-vertical-spread-option-strategy/

Options 101 FREE Course: https://www.rockwelltrading.com/free/options-101-course/

Call Debit Spreads Explained: https://youtu.be/x1QSY51JrbE

Put Credit Spreads Explained: https://youtu.be/tKKK4d9Ese8

Now that we’ve covered many of these strategies, I want to discuss which one is the best for any given situation.

Call Debit Spread

What is it? A call debit spread is a position in which you buy a call option and sell a call option at different strike prices using the same expiration date.
When to use? This strategy is used when you believe the stock is increasing in price.
Why trade? Trading this position can potentially reduce the overall cost associated with taking on the trade. This type of strategy also reduces the break-even price of the trade.
Loses value when? The underlying stock moves sideways or downward.
Max Risk? The max risk associated with this strategy is the cost of the premium paid to take on the trade.
Max Reward? The max reward for this strategy is the difference between the strike price of the two calls, multiplied by 100. Minus the premium paid to take on the trade.

Put Debit Spreads

What is it? A put debit spread is a position in which you buy a put option and sell a put option at different strike prices with the same expiration date.
When to use? This strategy is used when you believe the stock is decreasing in price.
Why trade? Trading this position can potentially reduce the overall cost associated with taking on the trade. This type of strategy also lowers the break-even price of the trade.
Loses value when? The underlying stock moves sideways or downward.
Max Risk? The max risk associated with this strategy is the cost of the premium paid to take on the trade.
Max Reward? The max reward for this strategy is the difference between the strike price of two calls, multiplied by 100. Minus the premium paid to take on the trade.

Call Credit Spreads

What is it? A call credit spread is a position in which you sell a call option and buy a call option as protection. These option contracts have different strike prices but have the same expiration date.
When to use? This strategy is used when you believe the stock is decreasing in price or trading sideways.
Why trade? Trading this position produces a credit in the form of the premium received for selling the put option. Buying the additional call option provides protection, limiting the risk of the trade.
Loses value when? The underlying stock moves up quickly past your strike price.
Max Risk? The max risk associated with this strategy is the difference between the strike prices, multiplied by 100.
Max Reward? The max reward for this strategy is the premium received for selling the call option, minus the premium paid for protection.

Put Credit Spread

What is it? A put spread is a position in which you sell a put option and buy a put option as protection. These option contracts have different strike prices but have the same expiration date.
When to use? This strategy is used when you believe the stock is increasing in price or trading sideways.
Why trade? Trading this position produces a credit in the form of the premium received for selling the put option. Buying the additional put option provides protection, limiting the risk of the trade.

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Видео The Best Vertical Spread Option Strategy 2020 канала Markus Heitkoetter