Buy Debit Spreads For Less Than Intrinsic Value

Subscribe to our Second Channel: @tastylivetrending
Check out more options and trading videos at www.tastylive.com!
======== tastylive.com ========
tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we’ll help you take your trading to the next level, whether you are new to trading or a seasoned veteran.
Follow us on Twitter: tastyliveshow
Check out our Instagram: tastyliveshow
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure(www.theocc.com/company-inform...) and the Futures and Exchange Traded Options Risk Disclosure Statement(assets.tastyworks.com/product....
Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request.
tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. 
tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with tastylive whereby tastytrade pays compensation to tastylive to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of tastylive by tastytrade. tastytrade and tastylive are separate, but affiliated, entities with their own products and services. tastylive is the direct parent company of tastytrade.

[@thehoopscoop]

genius! never thought about debit spreads this way!!!

[@sanketsawant7475]

Again it's all abt risk reward ratio. If u go closer strike to spot to sell, to get benefited of positive theta bt your profit will be less compared to deeper otm option to sell

[@yongb.1618]

thanks great idea

[@DepthWish]

Nice tricks!!

[@memeboooiiii]

nice vid

[@50tigres79]

Does this idea work for Credit spread?

[@tastyliveshow]

No - credit spreads are already purely extrinsic value, so there is no intrinsic value to offset.

[@G-y_m]

So risking 480 to profit 20 in the first example?

[@chaz72987]

even worse risking $400 to make $10 in the second

[@AS-bm6vs]

what if after buying long call vertical spread , later then i received assignment on my short call component ,
could that happen ?
what would be the impact of that on my trade ?

[@tastyliveshow]

Yes that could happen - the risk profile of the trade doesn't change - just the buying power would increase as you'd have 100 short shares of stock. This is rare though, and you can gauge assignment risk by looking at extrinsic value in the ITM short call - the less extrinsic value there is, the higher your risk of assignment is.