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
How do you set up a Bear Put Spread?
BUY a PUT and SELL another PUT at a LOWER strike price… both same expiration.
How does a Bear Put Spread profit?
when share price decreases
How do you calculate your Breakeven point on a Bear Put Spread?
Breakeven = Long Strike - Debit
How do you calculate max profit on a Bear Put Spread?
Max Profit = (Spread Width - Debit) x 100
How do you calculate max loss on a Bear Put Spread?
Max Loss = Debit x 100
What is the ITM Probability of a Bear Put Spread?
(Debit / Spread Width) x 100
When you hear Short Put Spreads, Put Credit Spreads, and Selling Put Spreads… what Spread Strategy are these names referring to?
Bull Put Spread
How do you set up a Bull Put Spread?
Sell a put and Buy another call at a LOWER strike price… both same expiration.
When does a Bear Put Spread profit?
when share price rise
How do you calculate the Breakeven Point on a Bull Put Spread?
Breakeven = Short Strike - Credit
How do you calculate max profit on a Bear Put Spread?
Max Profit = Credit x 100
How do you calculate max loss on a Bear Put Spread?
Max Loss = (Spread Width - Credit) x 100
What is the ITM Probability of a Bear Put Spread
(Spread Width - Credit) / Spread Width x 100
