125: What the Books Don’t Teach About Vertical Spreads
Description
Updated options trading research now available in the SPX Income Masterclass geared towards beginners with small accounts and for those who don't want to watch the market all day. The strategies included in this Lifetime Access and Updates course are mechanical in nature and lend themselves to automated trading which is also discussed in the course.
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In this episode, I discuss something about vertical spreads that options education books typically don't include. We'll explore comparing buying a single call option vs. buying a long call spread aka. bull put spread through the lens of trading strategy.
The primary point is that there is a level of consistency with vertical spreads over single options in that the cost of the spread is relatively the same over time whereas the cost of the call can vary due to volatility. This can make it harder to allocate a consistent amount of capital to a strategy.
The downside with vertical debit spreads of course is that you gaining consistency but at the cost of capping your upside gains if the market moves heavily in your favor.
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Disclaimer: This podcast is for informational and educational purposes only and should not be considered financial advice.