Debit Spreads Explained - Bull Call Spread / Bear Put Spread

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  • Опубликовано: 4 дек 2024

Комментарии • 66

  • @JakeBroe
    @JakeBroe  3 года назад +1

    Give this video a LIKE to support my channel! Also check out my entire playlist on Trading Options here!
    ruclips.net/p/PLscTZuOqKWIxSZzy4ObKWDznEsCot_1HU

  • @MannyCovington
    @MannyCovington 3 года назад +14

    Debit Spreads honestly helped me build up my smaller account. With only needed as low as $50, it can add up over time. Great video!

    • @JakeBroe
      @JakeBroe  3 года назад +1

      Thanks MC PF! For sure, debit spread can be explosive!

    • @not_enoughmana
      @not_enoughmana 2 года назад

      Awesome. Great to hear.

  • @angelalvarez212
    @angelalvarez212 4 месяца назад

    Thanks so much Jake, I was getting too much anxiety before understanding spread options. Calls and puts are much easier, but with spreads it's weekly profits for me. You're a great teacher!

  • @hassanem8731
    @hassanem8731 3 года назад +7

    Thank you so much this makes sense now thanks again

    • @JakeBroe
      @JakeBroe  3 года назад

      You are welcome Hassane! Cheers!

  • @couldbanyone9318
    @couldbanyone9318 Год назад

    dude, you're the bomb, subbed and will donate. Brilliant vids the way you explain spreads. I spent 6.5k on a trading course and they can't (or won't) explain how spreads work. Keep up the good work.

  • @aw1078
    @aw1078 3 года назад +1

    I love Bull Call Spreads but I always buy the furthest dated LEAPS and buy the ATM Call & sell an OTM Call to increase my POP. I usually look to close at 25-50% profit. I'd say I've made money with this strategy at least 80% of the time.

    • @JakeBroe
      @JakeBroe  3 года назад +2

      Solid plays C P!

  • @ralphlauren3621
    @ralphlauren3621 Месяц назад

    This is good as it explains the key concepts of debit spreads. However, what would be a proper trading plan using debit spreads?

  • @POSITIVEMEE11
    @POSITIVEMEE11 Месяц назад

    Love thisss channel!!! Can you please tell me which broker this is your trading on

  • @alfredotoral5910
    @alfredotoral5910 3 года назад +2

    Great vid jake as always 🙏🙏🙏

    • @JakeBroe
      @JakeBroe  3 года назад

      Thanks Alfredo! Cheers!

  • @behrensf84
    @behrensf84 3 года назад +1

    Hi Jake, question, when you are selling a credit or a debit spread, how do you make sure that both trades in the spread will execute simultaneously?

    • @JakeBroe
      @JakeBroe  3 года назад +1

      Hey Felipe! You can guarantee they both exercise by either doing a market order or a total cost limit order!

  • @tgpomy
    @tgpomy 2 года назад +2

    So for the Bull Call Spread example, assuming the stock price went up to $530, would I have to manually close both of my positions (i.e. sell to close Call #1, then buy to close short Call #2)? Or just let them expire and wash against each other?

    • @williamcrowder2226
      @williamcrowder2226 11 месяцев назад

      Expiration: If you let the options expire, both options will be automatically exercised. This means:
      You'll buy 100 shares of the underlying stock at the lower strike price (Call #1).
      You'll immediately sell those 100 shares at the higher strike price (Call #2).
      The difference in strike prices will be your profit, minus any premiums paid.

  • @echolitis
    @echolitis 7 месяцев назад +1

    At 4:30 Why can't I just close the sell call and keep the buy call when it gets to that point?

  • @waleedshaarani1897
    @waleedshaarani1897 2 года назад +4

    I just want to let you know I have been searching far and wide on an easy explanation of vertical spreads and you are an amazing teacher. I finally get it hearing it from you.
    I have been a long time fan of yours and first started looking into your content when I got into selling covered calls and cash secured puts. Currently, looking to do more research on the buying side but like you said sometimes you’re tying up so much money to potentially lose. This is a great strategy to mitigate that. Just a quick question though. Is closing out the options the same as closing out any other option, you just do the opposite. You sell to close the one you originally bought, and buy to close the one you originally sold?

    • @joecreasey8705
      @joecreasey8705 Год назад +1

      Agreed, amazingly simple explanations. Definitely, allows newbs like myself to have a better understanding of the concepts to which further research is necessary to make these something I can add to my tool belt. I'm subscribed to the channel, keep the lessons coming!

    • @deeptoot1453
      @deeptoot1453 8 месяцев назад

      Jake's great. Probably my favorite Trading channel out there.
      To answer your question, yes I believe. But don't take my word for it. Up until this point I have never had to sell to close.

  • @nomadicliberty
    @nomadicliberty Год назад

    Any videos explaining how to end these trades with your brokerage when the expiration date arrives.

  • @nandocame620
    @nandocame620 Год назад

    How to manage a debit spread gone or going wrong by rolling out or other methods, thanks

  • @eranozery
    @eranozery Год назад

    Hi Jake, great video! Really clear. Not sure I understood the last part. If the options is out if the money don't they just expire worthless? From what you said it sounded like the loss is unlimited

  • @uyenle6474
    @uyenle6474 3 года назад +1

    great video, easy and clear explanation. thank you so much

    • @JakeBroe
      @JakeBroe  3 года назад

      Thanks for watching uyen Le! Cheers!

  • @austindrury856
    @austindrury856 3 года назад +1

    Hi Jake, Great pair of videos! I'm sure you would ideally do vertical spreads on high volume securities, right? But if you were to do it on a low volume security, would it be possible for one leg of the chain to execute but the other not, leaving you with a naked call/put? Or does the broker treat this spread as a single transaction?

    • @JakeBroe
      @JakeBroe  3 года назад +3

      Hey Austin! Yes, I would argue you only trade spreads on stocks with a market cap of 100 Billion or more. And yes, your broker should treat it as a single transaction and you can set it as a market order or a limit order for the spread.

  • @luismacfarland6592
    @luismacfarland6592 Год назад

    For these spreads if you really only getting the premium because everything else will expire could you sell the stock after you get the premium?
    Also love your video's would it be possible for you to show to buy or sell options with a small account may be 1or 2K?

  • @pauljnot
    @pauljnot 2 года назад

    Hi Jake
    If your debit spread is deep in the money with a couple weeks before expiration, are you able to, and is there any benefit, to close the call option you sold?

    • @JakeBroe
      @JakeBroe  2 года назад +1

      Hey Nakjam! If you want to close the short leg you sold, then you would only do this because you think the share price will keep going up. There is benefit to this if you are confident the share price won't turn against you. But then at this point you are just holding calls.

  • @k.elysee6527
    @k.elysee6527 Год назад

    Does the DB Spread act as an instrument to, essentially, DISCOUNT a hedged position you've taken??

  • @richards5875
    @richards5875 Год назад

    Great explaination. Can I ask, is this you using Charles Schwab web based platform in your examples? Thanks.

  • @greenb6149
    @greenb6149 2 года назад +1

    clear explanation!

    • @JakeBroe
      @JakeBroe  2 года назад

      Thanks Green B! Cheers!

  • @edgarfletes8196
    @edgarfletes8196 3 года назад +1

    Very interesting, I think I like the Credit Spreads better though.

    • @JakeBroe
      @JakeBroe  3 года назад +2

      I agree! I like the credit spread better as well!

  • @tx8848
    @tx8848 10 месяцев назад

    Thanks Jake, 💯👍👏👏👏👏

  • @anthonyshaw7101
    @anthonyshaw7101 2 года назад

    Really good thankyou.

  • @acoolghost8538
    @acoolghost8538 5 месяцев назад

    do you need 100 shares to execute this spread?

  • @MrFartyman44
    @MrFartyman44 8 месяцев назад

    What happens if someone exercised the call you sold out of the money? I know that’s 99.9% never going to happen but if it did?

  • @kellymarchuk3875
    @kellymarchuk3875 7 месяцев назад

    Does anyone have a video that shows how to close a stop limit order debit spreads on TWS?

  • @hunghong9108
    @hunghong9108 2 года назад

    Hi Jake, I have a question. I would like to apply Option Level 2 at Schwab, but it requires margin on my account. If I am accepted, can I trade spreads or iron condor without using margin? I have enough money to trade, and don't want to use margin. Thank you :))

    • @marcosgonzalez_
      @marcosgonzalez_ 2 года назад

      Iron condors I think requiere 4 legs. And that would be level 3

  • @Oc.9086
    @Oc.9086 2 года назад

    Hello I’m trying to do a project for one of my finance classes, I am trying to do a Bull Call Spread for Apple but everytime I look at the strike prices in options most of the strike prices are well below the stock price of Apple which is 170.40 can u explain why this is?

  • @chiefskingdom738
    @chiefskingdom738 3 года назад

    Call debit spreads on FB January 23 is amazing

  • @aknaama
    @aknaama 3 месяца назад

    9:13 return is 22% not 122%.
    550/450 = 1.22-1 = 0.22 * 100 = 22%

    • @sprinkles2765
      @sprinkles2765 2 месяца назад

      The $550 is the return. You paid $450 and made $1,000, so you returned $550 which is 122% of $450.

  • @vufirst
    @vufirst 3 года назад +3

    I love the way you explain things. Have you thought of becoming a teacher? :-)

    • @wess8131
      @wess8131 3 года назад +1

      He can make much more $$ investing (trading) then being a teacher :)

    • @vufirst
      @vufirst 3 года назад +1

      @@wess8131 money is not everything. He is doing RUclips is not really for money either :-). Maslow's hierarchy of needs!

    • @BigBoyOtero
      @BigBoyOtero 3 года назад

      @@vufirst he's making $100k/yr (mI'm assuming more, his subs have nearly double). This guy is humble and a spectacular teacher.

    • @JakeBroe
      @JakeBroe  3 года назад +10

      Thanks Vu! I actually was an elementary school teacher in South Korea for 6 years before joining the Air Force. So I have experience and I do consider what I am doing on RUclips to be teaching. Cheers!

  • @Kindafu
    @Kindafu 2 года назад

    so the debit spreads are a little more profitable than the credit spreads

  • @shb377
    @shb377 3 года назад

    Informative Jake. No more videos on Calls anymore?

    • @JakeBroe
      @JakeBroe  3 года назад +1

      Hey Sh B! I am going to start up my Schwab trading challenge again soon and I will be trading spreads. They are just more efficient for my money. Faster leverage basically than just buying long calls!

  • @w1redrage
    @w1redrage Год назад

    is this the same thing as a poor mans covered call/secured put?