In part 1 one of this lesson we looked at debit spreads, how they work, and why you'd want to use them. In simplest terms, a debit spread is still a net-long purchase of a put or call that bets on a stock's (or index's) direction. In that it's a debit, you're paying mo...
This spread, being a purchasing put option, enables selling another put option with a lower strike price sharing an expiry date. As a debit spread, its losses are restricted to net premiums paid, while the maximum profits equal the strike prices minus the net premiums paid to cover the posit...
Option-adjusted spreads are often used to pricemortgageproducts that have embedded options to the mortgage holder, such as prepayment options. The prepayment option allows the borrower the right to pay the entire amount of the mortgage before it is due, which reduces the amount of interest thelen...
Going Vertical with Debit Spreads: Option Traders like Credits in Spread Strategies, but Debit Spreads Have Unique Properties That Often Make Them a More Favorable TradeCredit spread strategies have a strong following for obvious reasons. A main component of...Kmiecik, John...
There are manyoption trading strategies"out there" such as strangles, straddles, bullish call debit spreads, bearish put debit spreads, ratio spreads, butterflies, condors, collars, calendar spreads, covered calls, iron condors, victory spreads and credit spreads. Many of these have their own varia...
January 10, 2024 We more than doubled the number of vertical spread combinations that can be searched. Due to user interest in bull put credit, bear call credit, bull call debit, and bear put debit spreads that have expiry further out in time, we have added more vertical spread search re...
Calendar Spreads Debit Calendar Call Debit Calendar Put Multi-Leg Trades Multi-Leg Trade Screener Butterfly Screeners Call Butterflies [Short ATM, Long OTM] Call Butterflies [Long ATM, Short OTM] Put Butterflies [Short ATM, Long OTM] Put Butterflies [Long ATM, Short OTM] Iron Butterflies [...
Ratio Spreads Ladders Box Spreads Synthetics By Exposure Bullish Strategies Bearish Strategies Long Volatility Strategies Non-Directional Strategies Option Strategies in General Call, Put, Long, Short, Bull, Bear: Terminology of Option Positions Option Strategy Legs Explained Drawing Option Payoff Diagrams ...
Net Debit $5,003 A Collar is being long the underlying asset while shorting an OTM call and also buying an OTM put with the same expiration date. The Max Loss is any loss taken on the stock +/- the premium for the options. The loss on the stock will be the purchase price of the...
Net debit: -$2.54 Upon entering the trade, it is important to know how it will react. Typically, spreads move more slowly than most option strategies because each position slightly offsets the other in the short term. If DIA remains above $113 at July's expiration, then the July put wil...