Vertical Spread Strategies in Practice Flashcards
When you hear Long Call Spreads, Call Debit Spreads, and Buying Call Spreads… what Spread Strategy are these names referring to?
A Bull Call Strategy
How do you set up a Bull Call Spread?
Buy a call and sell another call at a HIGHER strike price… both same expiration.
How does a Bull Call Spread profit?
when share price increases
How do you calculate your Breakeven Point on a Bull Call Spread?
Breakeven = Long Strike + Debit
How do you calculate your max profit on a Bull Call Spread?
Max Profit = (Spread Width - Debit) x 100
How do you calculate your max loss on a Bull Call Spread?
Max Loss = Debit x 100
What is the ITM probability calculation for Bull Call Spreads?
(Debit / Spread Width) x 100
When you hear Short Call Spreads, Call Credit Spreads, and Selling Call Spreads… what Spread Strategy are these names referring to?
Bear Call Spread
How do you set up a Bear Call Spread?
Sell a call and Buy another call at a HIGHER strike price… both same expiration
How does the Bear Call Spread profit?
when the stock price decreases
How do you calculate Breakeven Price on a Bear Call Spread?
Breakeven = Short Strike + Debit
How do you calculate max profit in a Bear Call Spread?
Max Profit = Credit x 100
How do you calculate max loss on a Bear Call Spread?
Max Loss = (Spread Width - Credit) x 100
What is the ITM Probability calculation for Bear Call Spreads?
(Spread Width - Credit) / Spread Width x 100
When you hear Long Put Spreads, Put Debit Spreads, and Buying Put Spreads… what Spread Strategy are these names referring to?
The Bear Put Spread
