Option Spread Strategies: Mechanics and Real World Opportunities

Option buying poses significant challenges to traders due to the hurdles of time value erosion, and the necessity to implement positions with near perfect timing. Yet, option sellers face theoretically unlimited risk in return for limited a limited reward. Perhaps the best approach is trading various option spreads which, if structured correctly, work toward mitigating the disadvantages to buying or selling options outright.  In this complimentary trading education video we discuss the advantages, mechanics, and execution, of various option spread strategies. Click on the image below to begin watching this free video on option spread trading:

Topics covered include:

• A crash course in the basics of options
• Long vs. short options
• One-by-two ratio spreads
• Convert a ratio spread into a butterfly
• Iron butterfly
• Debit spreads (bull call spread & bear put spread)
• Shifting the break-even point by selling more premium
• Avoid the common pitfalls of option spread trading
• Managing margin