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Option Spread Differences Explained | Options Trading Concepts
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- Опубликовано: 14 авг 2024
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Dear RUclips Algorithm: This one of the most succinct, best-explained video on the various differences between stock option contracts, specifically diagonals, verticals and calendar spreads! I have struggled for the past 2-3 years. You brought clarity and vision within 12 minutes. Thanks, Daniel.
Always well presented Mike, thank you
This is my only favorite site to learn about option trades. Hey, and I am brand new in this type of investment...
These videos are so helpful! Thanks for putting together such high quality videos!
Awesome explanation thank you Mike.
Thank you!
Do you have any recent videos on trading verticals or calendars/diagonals on think or swim? I know the theory but I want to learn how to use them for steady income with recent stock. Or maybe other strategies (strangles/straddles) are better for steady income.
I cannot seem to find an answer to a question I have, is there any type of strategy that revolves around buying a long call option and selling a cash secured put option at the same strike price but different expiration date? The cash secured put would have a shorter time frame so I profit if the underlying stock doesn’t move much in the shorter term but the call option is there to give me the upside potential profit in the future ie 30 days out. That way I can attain premium weekly but I’m not capped with profits because of my long call. I know having the cash secured put will tie up a lot of capital but if the stock goes against me I’ll buy back the cash secured put before expiration date so I don’t get assigned and sell my covered call before expiration date to limit my losses. My stop loss would be very very conservative to prevent huge losses and of course the underlying stock would be a very stable one (AMD). Is there something that would be more efficient than this strategy? Or would I be better off buying the underlying stock since my capital is already tied up? My account is limited to cash secured outs and covered calls so I can’t sell options without collateral.
Thanks in advanced!
This is simply a customized long stock replacement strategy - synthetic long stock is selling a put and buying a call on the same strike and expiration, so staggering the strikes and expirations results in the same sort of unlimited upside exposure, with different risk exposure. Maybe check out the ZEBRA strategy, but that is buying 2 long calls and sellling one call against the pair, so you'd need to be able to buy a spread - www.tastytrade.com/tt/shows/trade-managers/episodes/portfolio-hedging-zebra-static-delta-10-24-2018
Yea it's hard to know what your talking about not seeing it on the platforms played out
Great video! Love the updated whiteboard. What are your thoughts on doing videos on each type of spread with maybe 3 live examples using the new platform? Being able to watch you work through each trade would be great for us visual learners.
That's a fine suggestion, I'll keep that in mind for the future!
Thanks
What about if I sell a put otm with 70 dte and buy a long put further out of the money then the short put with 40 dte. I would collect more credit then keep both puts in the same expiration cycle and i would reduce my buying power less when i keep the strikes very close together. What do you think?
Great!!
Love these videos BUT why not show the chart at 1 minute like the options chain with the larger number at the bottom.
Kindly tell me to how find out the BEP (break even point) of butterfly,butterfly spreads,and if the position go against me then how to hedge that position....
Here is a blog post we created that will be helpful:
www.dough.com/blog/long-butterfly-spreads
Hi , how can you tell which vertical has which assumption ( bear\bull) ?
Whichever option is most expensive in the trade is the dominant option and where you make your money. In a bull call spread, it is bullish because the long call has more value and a higher delta, and you want that to increase in value.
In a bear call spread it is bearish because your short call has the most value, and you want that to go to zero to make 100% profit on the trade. It comes down to delta and value of the option
like if you're here to get a refresher on trading the coronavirus volatility
can you sell diagonal spreads for a credit?
If you're selling long term options and buying near term options, a reverse diagonal spread, then yes, it's just opposite in every way.
If you're bullish in Short Put Spread sell ITM Put? Long Put Spread missing?
On the short put spread, what's the purpose of buying a put, if we want the stock to rise?
With a short put spread, buying a put just ensures that if the stock price goes down, we cap losses at the long put strike. If I sell a short put spread for $1.00 that's 3 points wide, with the long put being 3 points lower than the short put I sell, my max loss is $2.00. If I didn't buy the protective put below the short put, my max loss would be undefined, but capped if the stock price went to $0.00 as a stock cannot go lower than that.
It is simply an insurance policy on the short put we sell, and a great way to contain trade size in higher priced underlyings.
tastytrade Wow, you answered. So I do a short put spread if I don't own 100 shares of the underlying stock? I know my questions are dumb, sorry. I am new to all this. Your videos have taught me a lot.
If you don't own the shares and want to use an option strategy as a way to be bullish on the underlying, a short put spread is one of the strategies a trader can use to do so. Long call spreads, long call diagonal spreads, etc. will also be the same assumption. Glad you are enjoying our content!
SAMHANE110 I’ve learned there’s no dumb questions especially when it comes to money!!
long call spread. Can i trade weekly?
You certainly could if you wanted to - we prefer to trade longer term timeframes as it gives us time to be correct if a trade moves against us.
When I try to do it in Fidelity it has different exp date
Idk if it’s just me.. but Calendar spreads just seem not worth any of the effort in comparison to the other two spreads.
Vertical spreads: Why is it called a Long Call Spread instead of Short Call Spread.
Diagonal spreads: Why are they called Long Call, Long Put Spreads instead of Short Call and Short Put Spreads. Thank you.
A long call spread is bullish - the long call is the most expensive option in the trade and we want it to increase in value. A short call spread is bearish - the short call is the most expensive option in the trade and we want it to decrease in value.
Too fast. A but confusing. Im searching for someone to teach like the student knows nothing. I've learned about options from several avenues for over 2 Months and I know there is a lot that none of the demonstrators are showing to make it FULLY understandable
Agreed, needs to slow down and explain these concepts in more detail, maybe show us example trades on Robinhood.
Definitely not for beginners.
Too many RUclipsrs suck at explaining trading options for newbies.
Nobody explains WHY you do this
This guy is so cringe
He's a terrific teacher of options strategies - I've listened to him for several years.