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intro to spreads

Short Put Vertical

Analyzing the risk profile of a short put vertical

Short Put Verticals Compared To Long Shares

Now, let's compare the risk profile of a short put vertical to that of 100 long shares. Both positions would profit in a market rally, however the short put vertical has a much lower potential for profit. On the other hand, long shares carry far more risk than the vertical and have a much lower probability of profit.
Figure 1 Figure 2 Figure 3

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