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Trading Options: Bull Call Spread (Vertical Spread Strategy)

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Trading Options: Bull Call Spread (Vertical Spread Strategy) ★ SUMMARY ★ Hey! It’s Sasha Evdakov founder of Rise2Learn and in this video I want to share with you how to trade options more specifically, the vertical spread. The vertical spreads are fantastic option spreads to trade when you're looking to trade out larger dollar stocks because it allows you to use less capital for trading those bigger stock. First I want to show you the diagram behind what it looks like in a simplified version and i want to show you on the charts exactly what you're looking for. So before we get into them vertical spread i want to talk about the regular call spread first of this is called a profit picture if you've never seen one before and a regular call spread you have one call that you're purchasing and you're looking for a directional bet to the upside. Posted at: http://tradersfly.com/2014/03/option-strategies-bull-call-spread-vertical-spread-strategy/ ★ SHARE THIS VIDEO ★ https://youtu.be/r5J9jqT7W00 ★ SUBSCRIBE TO MY YOUTUBE: ★ http://bit.ly/addtradersfly ★ ABOUT TRADERSFLY ★ TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better. Stock trading and investing is a long journey - it doesn't happen overnight. If you are interested to share some insight or contribute to the community we'd love to have you subscribe and join us! FREE 15 DAY TRIAL TO THE CRITICAL CHARTS -- http://bit.ly/charts15 GET THE NEWSLETTER -- http://bit.ly/stocknewsletter STOCK TRADING COURSES: -- http://tradersfly.com/courses/ STOCK TRADING BOOKS: -- http://tradersfly.com/books/ WEBSITES: -- http://rise2learn.com -- http://criticalcharts.com -- http://investinghelpdesk.com -- http://tradersfly.com -- http://backstageincome.com -- http://sashaevdakov.com SOCIAL MEDIA: -- http://twitter.com/criticalcharts/ -- http://facebook.com/criticalcharts/ MY YOUTUBE CHANNELS: -- TradersFly: http://bit.ly/tradersfly -- BackstageIncome: http://bit.ly/backstageincome
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Text Comments (87)
S. M. Ferdous (1 month ago)
Great Sasha. Live long. How can I reach you? I need to learn more from you. How do I do that? SM FERDOUS Bangladesh
Elly Chiu (2 months ago)
Thank you I may listen
You're welcome - thanks for watching!
Hugh Henry (3 months ago)
i know this is an old video, but does an excellent job of explaining vertical spreads. I have watched a ton o videos and they miss out subtle details which prevented me from fully understanding the various types of options. Thanks!
Crypto Daws (3 months ago)
Omg imagine buying options when amazon was that cheap or even shares
GunP01nT510 (4 months ago)
I’ve been trading for a while but my first trade f*cked me. I made new rules for vertical spreads and they’ve been working fantastically! https://www.reddit.com/r/options/comments/a8ljfj/my_googl_995_put_spread_expired_atm_and_now_i/?st=JPZLWFBT&sh=07aeecd3
HD كاس العالم (8 months ago)
Am I the only one who still confused?
Alma Imari (6 months ago)
During an uptrend, these impulsive waves push prices higher in a relatively short period.If you want to learn one of the most powerful price action trading method, i highly recommend you purchase your copy of The Blended Model Strategy right now while it is still available.the method is simple, easy, and very profitable.
Options can be very confusing. You may want to take a look at some more books and courses that we have available
eM (9 months ago)
LOL AMZN at < $400! almost $1,885.
Cardosa Melissa (6 months ago)
Years ago I was thinking ITM options as one of the difficult platform in trading options, not until last year i came across the Blended Model Strategy, This strategy has changed my perspective about the trading market. I'm happy because as i am reading and learning this strategy, I'm going through what i learnt and many of my entries have been successful.
HD كاس العالم (8 months ago)
eM Lol it’s $2000 already
Lori Favela (10 months ago)
I'm going to start papertrading. I need to use these techniques carefully. Thank you for the basics..
Michael Soliman (1 year ago)
thank you mate , it helped me a lot in my CFA studies
jay fox (1 year ago)
hi I have a question when you buy multiple contacts and sell them on a vertical spread should your expiration date be 30 days or more to execute that strategy?
Mazeika Team (1 year ago)
What is this software that you use
Mazeika Team (1 year ago)
Sasha Evdakov Thanks!
John Rambo (1 year ago)
Sasha.. hi!... mmm online calculator risk graphic options?
Devon Olson (1 year ago)
So say I want to rotate between Bear Call Spreads and Bull Put Spreads, selling the open and buying to close a little further out. Would it be viable to choose strike prices at 90% OTM or roughly 5-10% Delta? Mostly for trading indices. I've seen some traders say do around 70% OTM for higher premiums but also a little riskier that the stock jumps or drops during the duration of that months contract.
Huy Vu (1 year ago)
hi Sasha, what trading platform do you recommend. Also, is the following statement correct "for iron condor, the max loss of the upper leg is the difference between the two upper strike, whereas the max loss of the lower leg is the difference between the two lower strike" ? I'm confused on this. thank you
Joe Lopez (1 year ago)
If a bull call spread goes against you slightly 1 week before expiration , is rolling the spread a good idea. I'm not sure how to calculate the roll?
Joe Lopez (1 year ago)
Thanks for the response, I rolled 1 month out for a slightly higher debit. I feel positive with this trade, I will make a little less but I just didn't want to take the loss and think it will go through my short
Thomas Kwoba (1 year ago)
How do u exit a weekly deep in the money vertical spread if the stock price goes above the short call?
Thomas Kwoba (1 year ago)
& are weekly options more like for early assignment?
Marcus Coelho (1 year ago)
I've only trade stocks, the think that is not very clear in options is that I could setup a vertical spread creating buy and sell call contracts, but what if only one of them is sold and the other is kept open. On every video it seems that all option contracts are under the assumption that they will always be sold, which doesn't seem like reality. Am I correct to assume that you have to create attractive contracts so ppl will actual buy them or anything sells?
Brendan G (1 year ago)
Funny watching this with AMZN now around $1k. But great video.
chalemi (2 years ago)
So when selling a put or selling a call, I assume I need to actually own the underlying shares?
Unknown Unknown (2 years ago)
Why can't you do a bull call spread where the long and short are both in the money? Is it because 0 option interest or volume?
Nate Moody (2 years ago)
What platform is this?
Tom Nguyen (2 years ago)
how about Implied Volatility?
Alan Nunez (2 years ago)
Would trading the two single calls cost the same as trading them together as a vertical spread?
stg5ive (2 years ago)
How do you close a vertical spread early or close one or two contracts out of a group of contracts using ThinkorSwim?
Cardosa Melissa (6 months ago)
Years ago I was thinking ITM options as one of the difficult platform in trading options, not until last year i came across the Blended Model Strategy, This strategy has changed my perspective about the trading market. I'm happy because as i am reading and learning this strategy, I'm going through what i learnt and many of my entries have been successful.
stg5ive (2 years ago)
Thanks, I figured it out now using both my mobile app and desktop platform. I'm going to practice on papertrade and then give them a try once I get comfortable
stg5ive (2 years ago)
So basically the same way as you would a single call or put
Tanner (2 years ago)
What happens if the contract reaches expiration?
stock trade (2 years ago)
Sasha can i buy and sell a call within 10 minutes ? If desired strike price is reached ? Do i need to wait untill someone buy my option ? it's the same like stock trading?
Anon¥mus (2 years ago)
One of my fears of selling a call or put is to get called or to get assigned. What is the likelihood of those events happening from selling options?
Anon¥mus (2 years ago)
Sasha Evdakov Good to know. Thanks.
Bibin mohan (2 years ago)
Do we necessary have to exit the position we took or what if it expires can u explain that too, it will be good.
Mark Jakims (2 years ago)
Your out in left field, it's a vertical
Bibin mohan (2 years ago)
u mean both debit spread and credit spread it is ok to let expire rather than square off the positions
FaraJi (2 years ago)
When putting on a Bull or Bear Call Spread are you required to own at least 100 shares for the call you wrote? Also, when putting on a Bull or Bear Put Spread, should you have enough money in your account to purchase shares for the put you sold?
Ramkumar Krishnamoorthy (4 months ago)
FaraJi No . Buy and sell will compensate each other
foki Farooq (2 years ago)
amazing video again. sasha can you please tell me if skew effects vertical spreads and how to avoid it?
Vishal Gupta (2 years ago)
I'm a bit confused. a vertical call spread means that you will buy one call and sell one call. I get that. However how is your risk defined if the stock crashes to zero? i mean, when you buy a call, i thought you can only buy the stock if it goes above a certain strike price, not below...right(which would be buying a protective put). also, is it okay to just let the options expire?
Vishal Gupta (2 years ago)
wow, thanks for explaining. That's what I was worried about, stocks falling and not being able to protect against it, unless you short it
Vishal Gupta (2 years ago)
+Sasha Evdakov (TradersFly) let me clarify. what happens if yoi have a bullish spread and the stock crashes by lets say 50 percent. can you describe what events happen?..would the call that you purchsed ger exercised automatically to protect your assets?
quinkadink (3 years ago)
when you sell the out of the money call instantaneously you receive a premium for selling the contract. The buyer looses money daily as a result of the contracts theta decay. How are you earning additional income from the theta decay, when you already received the premium when you sold the option :s?
huilin (3 years ago)
A bullish call spread is bullish on direction. Is it also bullish on volatility?
huilin (3 years ago)
+Sasha Evdakov (TradersFly) let's assume the payoff diagram with exercise price is $95 and $100 for a call bull spread. is it also bullish on volatility?
Sourav Ghosh (3 years ago)
Which software you are using for payoff simulation ????? Thanks in advance....
Ron Cash (3 years ago)
Can you describe SELLING a deep in the money trade? Can that work?
Ron Cash (3 years ago)
Thanks.  What I am confused about, is when I sell a call spread out of the money, there is a big margin for small profit.  If I check on deep in the money spreads, one I found was zero loss (no margin) and $5 dollar credit.  SPX at this week at 2000 sell, 2005 buy. The other thing is when I sell out of the money, the thing to watch out for is the stock not going above the sell price. But in ITM isn't this a problem, with the itm at sell spx 2000, buy 2005 TOS shows, "no loss" and $5.00 credit. Since spx is already above the sell price, isn't this a problem, like when I am selling OTM? Why does there seem to be a difference. I can't find discussions on these issues. A $5 credit with "no loss", seems I could do it all the time. What happens when assigned?
MikeDrones (3 years ago)
I took a udemy course on a different subject by you. I can't remember what it was but it was not about Options.
Corporate Algorithm (3 years ago)
This is a BRILLIANT explanation and I subscribed to your channel. Thanks so much I am going to watch all your videos.
irum shujaat (3 years ago)
nice video. if you own a stock but its deep in red. can you buy call and sell x2 the number of contract you buy increase you potential profit even more. and in same ticker you buy put and sell lower price 2x the number put bought. This way you are A. doing for credit. B. reaping higher return. C. winning no mater what happens. What you think?
Jerry G (3 years ago)
+irum shujaat I'm intersted, so can you try to explain this once again, because I didn't quite follow.
Austin Weiss (3 years ago)
to sell a call you must own a call... why would you already own a call at 370? was there a trade that led up to this setup?
Evan W (3 years ago)
Hey, I'm trying to grasp options concepts, could you answer a quick question? If I set up a bullish put or call spread, and the stock price dips below my sold put contract, what would happen if the person you bought my contract decided to exercise the option early before the expiration date? Does this happen? Would I be out of luck since the broker would exercise my bought option to cover?
Evan W (3 years ago)
+Sasha Evdakov By bullish put spread I meant selling a vertical credit put spread ITM. Thank you for the quick, helpful reply!
arm239 (4 years ago)
How do you select the strike price. CDo I have to buy ITM call. If yes how deep ITM?
Steve Kaldi (4 years ago)
Another great video...would be nice IF you could stat from the beginning as to why are we doing this vertical ???
Corporate Algorithm (3 years ago)
+Sasha Evdakov (TradersFly) why not sell a OTM put and sell the same call?
Steve Kaldi (4 years ago)
Sounds like GREEK to me
vampov (4 years ago)
Great video
Jason Levy (4 years ago)
Sasha, Nice video.  What program are you using that shows these stats?
Jhoni Jack (4 years ago)
Nice Video!!!
qdasoo7 (4 years ago)
Great video. Great way to explain the spread thoroughly and effectively.  Thanks I subbed for more.
Dan Pak (4 years ago)
Thanks for the video, helped me out a lot.  Although I do have a question: If the stocks price rises above (through) the roof of the capped profits from the short call option. Wouldn't the buyer be able to exercise that option and therefore putting the seller (me) at risk for an even bigger loss?
Dan Pak (4 years ago)
So, therefore (i'm just asking to make sure I have this correct) - my broker would automatically just exercise my long call option and I would just reap the benefits of the difference?
Omar Ramos (4 years ago)
im a little confused on if i should close out call before expiration or let it expire on its own. I just set a trade for facebook and stock price was 76.00 at time of purchase, i bought dec 20 75 call and sold dec 20 77.50 call. this cost me 1,014 and my profit should be 814. it expires in 14 days. so if i get to my 814 profit in 10 days, can i sell or do i need to wait for expiration?  if i get to 500 profit and i want to close out trade can i do that without losing any money? your help would greatly be appreciated. Ive always done straight calls or puts.
Freddy Rodriguez (4 years ago)
You seem to be using the words "premium" and "theta decay" interchangeably. I'm confused (newbie). Isn't theta just the decay in the option value as time diminishes towards expiry? and premium refers to the cost of purchasing the option...which is the same thing as your max loss (your risk)?
jasonc_tutorials (4 years ago)
So basically for vertical spread you sell your call before expiration and let the short call expire?
jasonc_tutorials (4 years ago)
+Sasha Evdakov thanks, that helps a lot.
juan carlos munoz (4 years ago)
Hi! Great Vid, I have 2 questions...  Do I have to own the stock to place a Sell Call?  The expiration date has to be the same in both the Sell Call and the Buy Call?
TheKMZ1 (4 years ago)
Technically no you don't have to own the stock. You can sell naked calls and puts..in other words you don't own the underlying stock. However, if you have never traded options before this is very risky and your brokerage would most likely not grant you that level of trading privileges.
Jose Garcia (4 years ago)
that was great,wow!
isao pilatowsky (4 years ago)
hi sasha, great videos, what software is this, can I do this kind of option analisys on telechart?
Tristan Marroquin (4 years ago)
Well selling put vertical spreads do you just let them expire or do you also manage them? 
Tristan Marroquin (4 years ago)
For some reason i thought you were forced to hold verticals till expiration.
Jaime Guzman (4 years ago)
Buying a call option has unlimited profit potential, but call spreads have limited profit potential.
Kevin Murray (4 years ago)
Great Video! If the stock goes beyond your Sell Call. Couldnt the buyer exervises the option and your loss would be substantial? I don't see how the only risk is the call you bought. If the strategy goes to plan do you just let everything expire or do you sell the call before expiration. Thanks .
Pete vk (4 years ago)
poor quality at 4min
Ang Singapore (5 years ago)
You need to share the reality of how it can go wrong and how to adjust the position because this is where capital could be very substantially dropped and  newbies are usually are not aware 
matt calay (4 months ago)
Ang Singapore definitely need to learn adjustments and can go against you by the time it finally gets profitable, i learned to set it up better if it goes in my favor from the beginning or sometimes leg into a bull/call if goes wrong
kauxkaux (5 years ago)
What software is that?

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