Bearish without going naked. This lesson shows how to get paid up front for a bear spread, and why that credit is not yet your profit.
After this lesson you can
- Work out a bear call spread's credit, breakeven and worst case, and the fixed margin it needs
- Compare ceilings by what each one costs, and by how many months of premium one full loss erases
- Build the bearish bet with puts for a debit, and choose credit or debit by where the strikes sit
- Decide when to close early, and what early assignment and pin risk mean for a spread
- Avoid the five mistakes, starting with counting the credit as money already made
Chapters
- 0:00A ceiling for the naked call
- 1:31Sell a call, buy a higher one
- 3:07Next to the naked call
- 4:55What the ceiling costs
- 6:23Before expiration
- 7:52The bear put spread
- 9:45Credit or debit?
- 11:07Managing a bear spread
- 12:52Five mistakes
- 14:10The whole lesson on one screen
Practice in the game: Level 13 · Half-Price Policy, Level 15 · Escape Hatch