Chuck Hughes Online - Profiting if an ETF is Up, Flat or Down

In this video, the Hughes Optioneering Team will explore an ETF option spread strategy that provides distinct advantages over ETF directional option trades. When you purchase a call option, the underlying ETF must increase in price or the call option will lose value possibly resulting in a 100% loss for your call option trade.
In this video the Optioneering Team will explore the ETF option spread advantages listed below:
1. Reduced Cost - An ETF call option spread is created by simultaneously purchasing a call option and selling a call option with a higher strike price. The sale of the call option reduces the cost of the option purchase. Most ETF option spreads cost $600 to $800.
2. The Option Sale Provides Downside Protection - The sale of a call option results in cash being credited to your brokerage account. This reduces the cost basis of the option purchase and provides downside protection in the event the price of the underlying ETF declines in price.
3. Spreads Can Be Profitable If an ETF Goes Up or Down - Depending on the strike price, option spreads can be profitable if the underlying ETF price increases, decreases or remains flat at option expiration. Many of our ETF spread trades can profit if the underlying ETF is down as much as 10% at option expiration.
4. Higher Percentage of Winning Trades - If your ETF debit spread can profit if the underlying ETF price increases, decreases or remains flat at option expiration then you will experience a higher percentage of winning trades compared to ETF directional option trades.
5. Allows You to Maintain Positions During Volatile Markets - The downside protection provided by the sale of a call option to create an ETF spread can help you maintain your spread trade during volatile markets. If you traded option purchases only, volatile price swings in the underlying stock can result in getting stopped out of your directional call option trade.
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