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intro to spreads
Introducing Defined-Risk Strategies
Learning to establish limits using vertical spreads
Recap
Cappa da Risk, Slappa da Bass
Reviewing defined risk:
- Defining risk can create opportunities for small account sizes to participate in higher priced products
- Defined risk spreads have a built-in exit strategy that can be tailored to your risk tolerance, and can't be denied by the market
- Verticals are the most basic defined risk strategy
- There are four different vertical spreads – long and short call verticals, and long and short put verticals
- The short strike drives the ship! Use its placement to determine bullishness or bearishness
- You can use risk to help you determine POP/POL
- NEVER pay more than the width of the strikes for a long vertical spread
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intro to spreads
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