vertical spreads

J

Jdesey

I have finally done the work to understand Credit spreads. It is not some
crazy hard to understand strategy to be scared of. I will be putting on my
first spreads this week. I have to face facts that after 3 years of straight buying calls and puts I am not profitable. Spreads put the time decay in my favor instead of working against me.

anyone who is doing spreads with success please comment.
 
Credit spreads in calls = debit spreads in puts. It's governed by the box-arbitrage. It's arbitrary to call a position a credit spread. One trader's cs is another's ps.

A 75/80 short call spread in AAPL is = the 75/80 long put spread. Dissected another way; trading both = long synthetic at 75, short synthetic at 80, long the box.

ATM/OTM spreads are long g, short decay. Details matter.

I assume that you're going to short wing-spreads, deep OTM. GL with that.
 
I'm also interested in this, what I found so far:

John Locke has two strategies (the bull and the super bull) which are bullish spreads,
you can find some material about them in youtube.

I found it reasonable but haven't tried it yet - I am waiting for a market rally to put them on.

If someone trades it (or traded it), please comment. Thanks!
 
And another cheap plug.
5123eYC-mAL._SY425_.jpg
 
Why would you choose to buy puts or call instead of trading the underlying??

And why flip to spreads when you were trading naked long calls or puts?? Why not do the exact opposite of your losing strategy??
( rhetorical question,I know the answer)

Sounds like you are a directional trader. If you can't make money trading the underlying, selling verts won't be the cure




Jdesey said:
I have finally done the work to understand Credit spreads. It is not some
crazy hard to understand strategy to be scared of. I will be putting on my
first spreads this week. I have to face facts that after 3 years of straight buying calls and puts I am not profitable. Spreads put the time decay in my favor instead of working against me.

anyone who is doing spreads with success please comment.
More...
 
Last edited:
Jdesey said:
I have finally done the work to understand Credit spreads. It is not some
crazy hard to understand strategy to be scared of. I will be putting on my
first spreads this week. I have to face facts that after 3 years of straight buying calls and puts I am not profitable. Spreads put the time decay in my favor instead of working against me.

anyone who is doing spreads with success please comment.
More...
Or you could meet somewhere in the middle. For instance, start with your usual long call. Half the time you'll be right and spot moves up. Then short a call somewhere above spot. Reduces your debit if spot reverses. Subsequent moves in spot ask that you add spreads of some type to constantly reposition the entire structure. Advantage to this back and forth positioning is that you're getting away from your prior all-in bet on direction with only hope to dictate outcome.
 
sonoma said:
Or you could meet somewhere in the middle. For instance, start with your usual long call. Half the time you'll be right and spot moves up. Then short a call somewhere above spot. Reduces your debit if spot reverses. Subsequent moves in spot ask that you add spreads of some type to constantly reposition the entire structure. Advantage to this back and forth positioning is that you're getting away from your prior all-in bet on direction with only hope to dictate outcome.
More...

Why do you want to cut your profits if you are right? What if u just caught a mega trend
 
traider said:
Why do you want to cut your profits if you are right? What if u just caught a mega trend
More...
Of course, you wouldn't want to sell something against your long call if your bet was the underlying goes to the moon. I'm simply responding to the OP's comment that the long call/put opinions he's had haven't worked out by giving him an alternative approach to stay in the game.
 
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