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The vertical spread options strategies are four of the most basic, yet most powerful options strategies that exist. Additionally, they serve as the building blocks for more complex strategies such as Iron Condors and Butterflies.
The four vertical spreads are the bull call spread, bear call spread, bull put spread, and bear put spread. The bull call spread and bear put spread are classified as “debit spreads,” while the bear call spread and bull put spread are classified as “credit spreads.”
In this video, I’ll cover essential concepts you NEED to understand before trading vertical spreads:
– The relationship between extrinsic value and the profitability of any vertical spread.
– Why debit spreads are NOT low implied volatility trades. In other words, buying spreads in low implied volatility is not necessarily optimal, though it is commonly taught that way.
– The pros and cons of short-term and long-term expiration cycles when trading vertical spreads.
– What to consider when choosing strike prices for debit spreads and credit spreads, with a real demonstration and comparison using the tastytrade trading platform.
– Logic behind taking profits and losses when trading spreads, as well as trade management techniques that can be used with any trading strategy.
Be sure to leave a comment down below with any questions you may have!
=== VERTICAL SPREAD STRATEGY TUTORIALS ===
Vertical Spreads (Basics for Beginners):
Bull Call Spread Tutorial:
Bear Call Spread Tutorial:
Bull Put Spread Tutorial:
Bear Put Spread Tutorial:
=== RECOMMENDED VIDEOS/RESOURCES ===
Options Trading For Beginners (PLAYLIST):
tastytrade Tutorials (PLAYLIST):
Option Pricing EXPLAINED:
Options Trading 101:
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