1. Find an opportunity in stocks that could move up at a specific target date. Best if you can predict roughly the target price. 2. Make sure if stock has options to trade on. 3. If you are a beginner, look at options with 60 to 90 days options months. LEAPS options are ok but [...]
In this article, I will introduce you the Bear Put Spread trade, the 4th in the vertical spread family. As you know, to take advantage of a down-trending market, you have 3 tactics to employ: short stock, short call and buy put. Buying put is the safest one of all 3 but it is not [...]
In this tutorial, I will show you how to draw a correct risk graph for a Bull Call Spread trade. Before we can draw a risk graph we need some information such as: Options Strike Price Price of Purchased Options Max Risk, Max Reward Breakeven point is optional to draw a graph but good to [...]
Bull Put Spread (BPS) is an options tactic to make money with put when the market is trending up. Like the Bear Call Spread, you can see, the name Bull Put Spread has 2 parts to it. Bull = Bullish, or up-market. Put Spread = an options combination of buying a Put and selling a [...]
Bear Call Spread is an options strategy to make you money in a crashing market using calls. The name has 2 parts: Bear + Call Spread. Bear is a market going down and trending down. It doesn’t necessarily mean the underlying instrument will go to zero and bankrupted. Call Spread works by combining a long [...]
A few days ago, I received a question about vertical spread and it is basically about if you can close down one leg of it. The short answer is yes, you can. You technically can close down one leg of this strategy at any point in time after getting filled. Closing down 1 leg of [...]
1. Selling the short leg of a different stock You would think that those who long one leg in MSFT and sell short leg in EBAY must be insane, right? Yes, they are.
If you are new to options trading, you probably heard about credit spread as passive income strategy. They said that you can go out and start selling this spread and pocket easy money every time.
Strategy: Buy put options contract + Sell lower strike put options contract (ratio of 1 to 1) on the same stock. Number of legs: 2 Market Prognosis = Bearish (Down-Market)
Strategy: Buy call options contract + Sell higher strike call options contract (ratio of 1 to 1) on the same stock Number of legs: 2 Market Prognosis = Bullish (Up-Market)
Wednesday, February 22, 11:26 pm
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