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VERTICAL SPREAD - Learn to Calculate and Trade Vertical Spread Options

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Let me show the Correct Way to Trade Bond Futures Enjoy a Free Week: Activedaytrader.com/youfree Jonathan Rose of Active Day Trader talks vertical spreads in this short but informative trading education video. Jonathan Rose covers how to calculate vertical spreads, and how to trade vertical option spreads. Vertical Spread, or vertical spreads are often used for put call parity examples, and put call option examples. Option spreads, and option spread strategies are a powerful way for option traders to control a fixed amount of risk, while staying in a trading position to capture awesome rewards. Vertical option spread trading is important for any option trader to understand. Jonathan Rose does his best to breakdown this lesson so anyone watching can easliy figure out vertical spread calculations.
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Text Comments (16)
Jonathan Rose (3 months ago)
Join us for a completely FREE WEEK - activedaytrader.com/youfree.... see you on the inside!
keyworth82 (3 months ago)
Credit spreads - prefer being the house but will take directional set ups as well
gwongmd (3 months ago)
I trade debit spreads. How do you manage a spread going your way very early where its trading $2-5 above or below both strike prices, but too much time is left before expiration and the price is not expanding beyond a 50--60% gain. Is it ever wise to partially scale out by buy back some of the short contracts? so that you are ow naked long?
Jonathan Rose (3 months ago)
absolutely... or just cover some spreads. I prefer to be patient and let it work until expiration... if you're concerned about the stock going down you could always sell a few shares of stock. if you're wrong, u lose on the stock but the spread will capture the other 40-50% gain. Trade your delta in this case.
James Byrnes (3 months ago)
Credit spreads
Jonathan Rose (3 months ago)
makes sense... more winners than losers
Dan Gold (3 months ago)
What about options that are heavily skewed to one side?
Jonathan Rose (3 months ago)
more opportunity for verticals IF an option is heavily skewed to one side
Koji seat (3 months ago)
nice short video to understand, Thank you
Jonathan Rose (3 months ago)
Thanks for watching and I GENUIENLY appreciate the comment
MauiGreenDragonism (3 months ago)
$3600 of risk to make $1400 isn't very appealing - BUT $1400 of risk is appealing to potentially make $3600 IMO
Jonathan Rose (3 months ago)
great point - it's all about the probabilities
keyworth82 (3 months ago)
Yes but when you factor in probabilities it may change your outlook: for the call credit spread max profit = 57% Max loss = 17% and Break even 65% and for the debit spread Max profit = 17% Max Loss = 57% and Break even 34%
Mike C (3 months ago)
3/1 is pretty damn good in a spread trade......
Rudy Oglesby (3 months ago)
on vertical spreads [ more debits than credits ] because of the margin requirements
Jonathan Rose (3 months ago)
I get that

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