Showing posts with the label options-spread

THE OPTIONS COURSE- Introducing Vertical Spreads

THE OPTIONS COURSE Introducing  Vertical  Spreads Since all markets have the potential to fluctuate beyond their normal  trend, it is essential to learn how to apply strategies that limit your  losses to a manageable amount. A variety of options strategies can  be employed to hedge risk and leverage capital. Each strategy has an opti mal set of circumstances that will trigger its application in a particular  market. Vertical spreads are basic limited risk strategies, and that’s why I  tend to introduce them first. These relatively simple hedging strategies en able traders to take advantage of the way option premiums change in rela tion to movement in the underlying asset. Vertical spreads offer limited potential profits as well as limited risks by  combining long and short options with different strike prices and like expi ration dates. The juxtaposition of long and short options results in a net  debit or net credit. The net debit of a bull call spread and a bear put