Put Options Lesson 6: How to Make Money With Ratio Spreads (SPY)

Ratio spreads have the highest probability of success. In this lesson, Lilia demonstrates how she placed the initial trade on 6/24/2014 and how she managed the spread on 7/18/2014 (expiration). Lilia uses Think or Swim's "On Demand" feature to "go back in time" so you can see EXACTLY what the option prices were on 6/24/2014 and 7/18/2014. This is the trade covered in the lesson: +5 July 2014 195 put at $1.54 -10 July 2014 194 put at $1.23 Net credit: $0.92 Net profit: $421.24 ALERT! At 4:38, Lilia said, "Roll to July." She meant to say, "Roll to AUGUST." At 7:45, Lilia said, "$960 max profit." Explanation: ($0.92) (5) (100) + ($1.00) (5) (100) = $960 At 13:30, Lilia said, "Buy to close long put." She meant to say, "SELL to close long put." Sorry about the confusion. Lilia www.moneyandlilia.com www.liliasmoneymusings.blogspot.com (see trades) Lilia offers 1-on-1 training upon request (not free).

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