Bullish, but not keen to pay full price for a call? This lesson shows how a second option lowers the cost, and exactly what the ceiling buys you.
After this lesson you can
- Work out a bull spread's cost, breakeven, best case and worst case before you enter
- Explain what the call you sell gives up, and why that makes the trade cheaper
- Build the same bet with puts for a credit, and choose between the two versions
- Pick the strikes and the width from your forecast, and enter the spread as one order
- Avoid the five mistakes, including expecting the full profit the moment the stock arrives
Chapters
- 0:00Cheaper, with a ceiling
- 2:01Two calls, one trade
- 3:54What it pays at expiration
- 5:42The three traps, softened
- 7:08The put version: paid up front
- 9:18Same trade, two ways to pay
- 10:53Where to put it, and how wide
- 12:49Placing and managing a spread
- 14:37Five mistakes
- 16:06The whole lesson on one screen
Practice in the game: Level 8 · Half-Price Ticket
Practice with:P&L Calculator