Clarification on options jargon regarding spreads - KamilTaylan.blog
18 June 2022 1:26

Clarification on options jargon regarding spreads

Are Option spreads profitable?

Only the strike price is different. Vertical spreads allow a trader to earn modest profits with less risk than buying a naked option and with considerably less risk than selling a naked option.
Bear Call Spread.

Stock Price Profit/Loss
S ≤ K1 = Credit Maximum profit: all options expire worthless.

How do you exit a spread option?

Exiting Losers

  1. Spreading to a vertical. Just like with the winning trade, sell a higher-strike call in the same month. …
  2. Spreading to a calendar. If there’s enough time left in your long call, another idea might be to convert it into a calendar by selling a shorter-term call with the same strike.