Vertical Spread Trading | Choosing an Expiration Cycle

When trading vertical spreads, choosing an expiration cycle is somewhat strategic.

With so many expirations to choose from, which ones should you trade?

In this video, you'll learn how short-term and long-term vertical spreads compare in terms of P/L when the stock moves to similar prices.

More specifically, you'll learn that shorter-term vertical spreads can hit high profit levels more quickly when the stock price moves favorably. However, when the stock price moves against you, a short-term vertical spread will suffer larger losses than a longer-term vertical spread.

We'll go through a few live examples using AAPL put spreads to demonstrate the concepts discussed in the video.

After watching this video, you'll have a firm understanding of how selecting a short-term or long-term expiration cycle can make a difference in strategy performance. tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade.

[mrcortadito]

Great video. I ran into that very same issue today... my spread was covered, only that it was too early and the profits were smaller than anticipated. Thanks for the explanation.

[benjx]

Great channel, I'm learning options for the first time from you. Q: I noticed on your latest 3 hour long options intro video, I believe I saw you have some Amazon options that are more than 800 days away from expiration. Could you please share your personal strategy with that as opposed to going for a short term expiration? Cheers!

[RajatSharma-jkqj]

One of the pieces of information that nobody will tell you, simply Great Stuff 👍🏻

[guyredares]

Very clear, thanks for this great series

[cbro]

Can you clarify something for me? When is a spread considered worthless? When the amount I paid for the spread goes to $0 or when the stock price goes and stays above my strike price? Example I bought a put spread on a stock trending upward. I noticed in back testing that the price will drop to .5 or .10 cents and not go any lower at expiration. Would I lose my credit if it doesn't show .00 or does the fact that the stock price is above my strike at expiration all I need to worry about?

[RosalindCheong]

Enjoy your channel ! if a stock is trending up but currently market is more volatile, is it a safer bet to have longer expiry date for buy vertical calls ? (assuming i am a longer term trader)

[jakevargas]

how do you know what strikes to put when doing a vertical spread?

[DavidTran-hfhn]

If I was a swing trader who held only 7-14 days, Is it advisable to get 21 days

[aeroscenicviews]

Forgive my ignorance but around the date of this video in 2017 AAPL was trading between 30-40. Where did you get 150 from?

[bballgtr]

Thanks but very hard to follow. It sounded like you confuse Oct and July a couple of times and the answer (while correct) did not make sense due to bad reference to strikes.

[tman]

Is there anything wrong with selling put spreads over a long period of time? I'm considering trading them over six months until expiration.

[sspatel]

Is there a disadvantage in undertaking a short call vertical spread (bearish) at an expiration date of UNDER 30 days?

[anthonysimmonsacousticmusi]

Also i see alot of volume on (1)day to exp but not sure whether i should try and trade bullish verts on that. Is that what everyone is doing or is everyone shorting it?

[anthonysimmonsacousticmusi]

Im struggling to get into a bullish vertical on amzn. Not sure if its platform failure or i am missing something. Volume is 50. And open interest is about 100. Is that to low to get in and out with 10 contracts

[praveshsharma]

it is nice but to begin with i will suggest we can explain and basic strategy in theory