The Right Way To Buy Options - Long Vertical Spread



www.SkyViewTrading.com Most traders start out buying options because it’s the simplest option strategy to understand. If you think a stock will go up, you’d buy a call. If you think the stock will go down, you’d buy a put. Well this is NOT a very good trading strategy because you’ll lose money every single day due to time decay. No smart investor is going to buy a depreciating asset and call it an investment. Watch this video to learn a better way to buy options to make a directional bet on a stock but WITHOUT time decay hurting you. We’re going to show you how to trade the Long Vertical Spread to accomplish this. Also, make sure to sign up for our FREE 3 Video Lesson Series at www.skyviewtrading.com! Adam Thomas Sky View Trading what are options how to trade options how to buy options option pricing options explanation stock options option strategies Vertical Spread Option Strategy Vertical Spread Iron Condor Bull Call Spread How To Trade a Vertical Spread option trading basics option time decay

Comments

  1. Good stuff
  2. Hi, I enjoyed your video but I just have a few quick questions. In scenario 1 you say that 'at the expiry date' the long 70 call is worth 9.50. My question is how exactly do you manifest that theoretical value into real value? I understand that the call option is worth 9.50 but that is only if someone is willing to buy that call option right? Do people really buy a call option 'at the expiry date'? And if no one is willing to buy it then is that option essentially worthless (that is unless you exercise your right to buy the share at $70 and subsequently sell it at $79.50 meaning that you would in fact own the share for a brief period of time)?

    Sorry I don't know if that makes sense but hopefully you can clear that up for me. I am from Australia btw.
    Thanks
  3. For Scenario 1 on the Vertical Spread when it says:

    Long 70 Call @7.50 -> 9.50 = +200
    Short 80 Call @2.50 -> 0.00 = +250

    I understand the first part with the Long Call but how would you make +250 on your short call? If the stock changed only .50 from the strike price of 80.00 wouldn't it +50 on your -250 investment, resulting in -200 for that Short 80 Call?

    I am probably wrong, just curious! Thank you for the great video though !
  4. whats a good app for beginners?
  5. Outstanding explanation of vertical spreads! I appreciate the thoughtfully scripted narrative and easy to understood visual. I've watch similar videos that many assumptions about the viewer's knowledge and experience with options trading, causing the videos to be ineffective for an introductory level of understanding. Prior to watching this video, I never understood why anyone would buy call options in the money. This video cleared that up for me. This is the first of your videos that I've watched. My hoped is that you also have more advanced lessons, and within those videos, you also refer viewers to other more basic videos like this one, if there's a need for a prepatory level of understanding prior to understanding more advanced concepts. Most of all, thank you for making the video clear, concise, and edited in a way that makes every second value added.
  6. Your videos are awesome and super helpful for a rookie like me trying to learn. My question is what are the exit choices? Specifically for a bull put and bear call credit spreads. I know that if taking max profit you can let them expire and keep the credit. BUT if the market goes the other way, can you let them simply expire and take a max loss OR do you have sell/but to cover your positions??? Many many thanks!
  7. What would happen if you hedged the vertical spread and put more money on the shorts and less on the longs but the market did not cross the shorts, kinda like a reverse iron condor?
  8. Great videos, great illustrations and examples, and live trading demos. Thank you. Can you explain a little bit slower? Lol. You are talking real fast like on rapid fire round.
  9. BRILLIANT!!! Thank you so much. I am going to join your course this year!
  10. How long does it take to be approved to trade spreads with TD Ameritrrade? Also, don't you have to have a successful track record?
  11. If you short a call option wouldn't your stock lose value due to the price of the stock going down, because you would have to buy 100 shares to short? That would mean your max loss is $75*100 - 500 per long vertical spread option. Maybe I'm missing something.
  12. As others seem to be confused about this too.. are you ever at any time actually "owning" the underlying stock? My understanding is, buying options gives me the "right", but not the "obligation" to actually buy the underlying stock. Example: I've purchased "call" options simply by trading the premiums. Is this the same? Thanks.
  13. same thing with the slice at 4:27, the vertical spread return is (250-500)/500=-50%, and single option return is (250-750)/750=-67%.
  14. It doesn't make sense on slice 3:13. You cannot count the profit of short 80 call twice. The profit should be 0. Because you already counted the $250 profit in your initial cost of $500 ($750-$250). So, the return should be 200/500 = 40%.
  15. Im all messed up with the buy and sell call definitions. I should have probably learnt to trade options before learning stocks. feel like smacking myself for this
  16. Great video! I understand about buying the call ATM but when you sell the call is that a naked call sale or a cash secured call? Confused
  17. Wait but what you to put for the expiration? The first date available? I am obviously new to this please be kind... Thank you...
  18. This is the only way to make money using this strategy.
  19. i don't see an answer to the following question . . . . .    >>>>>> kingmike40 (2 months ago) . . . . If you sell a call option what happens if the option is exercised?>>>>> Gman Dotcom: hey skyview where is the answer to this question???<<<<<<
  20. I dont understand how you are selling the short 80 call unless you already own the underlying stock?


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