The Vertical Spread Options Strategies (The ULTIMATE In-Depth Guide)

The vertical spread options strategies are at the core of EVERY complex options strategy. If you can master these, you will understand 80% of options trading strategies.

In this video, you will learn to master the vertical spread strategies through in-depth explanations, trade setup visualizations, expiration risk graphs, and visualized trade performance visualizations using real option data.

I'm also going to teach you more advanced topics, such as understanding how a vertical spread's profitability relates to the amount of time to expiration, time decay, and changes in implied volatility.

My hope is that with this video, you can develop a deep understanding of the four vertical spread strategies, and make a gigantic leap forward in your options trading expertise. Not only will you learn the basics and see examples of how the strategies work, but you will also learn to understand vertical spread mechanics like an options trading expert.

Video Timestamps

0:00 - Introduction
0:48 - Video Prerequisites
1:14 - What is a Vertical Spread?
2:21 - Why Trade a Vertical Spread? (Single Options vs. Spreads)
6:05 - The Bull Call Spread (Call Debit Spread)
8:23 - Bull Call Spread Expiration Risk Graph
10:41 - Why is a Vertical Spread's Max Value the Width of the Strikes?
11:49 - Bull Call Spread Trade Example (Real Data Visualization)
15:09 - How to Close a Call Debit Spread
16:14 - The Bull Put Spread (Put Credit Spread)
18:46 - Bull Put Spread Expiration Risk Graph
20:33 - Bull Put Spread Trade Example (Real Data Visualization)
23:01 - The Bear Call Spread (Call Credit Spread)
24:42 - Bear Call Spread Expiration Risk Graph
26:13 - Bear Call Spread Trade Example (Real Data Visualization)
27:07 - How to Close a Call Credit Spread
28:29 - The Bear Put Spread (Put Debit Spread)
29:45 - Bear Put Spread Expiration Risk Graph
31:19 - Bear Put Spread Trade Example (Real Data Visualization)
35:14 - Vertical Spread Profitability vs. Time to Expiration/Time Decay
40:56 - Using tastyworks to Compare Vertical Spread Prices vs. Time to Expiration
43:31 - Vertical Spread Profitability vs. Changes in Implied Volatility
44:34 - You Want Implied Volatility to DECREASE When...
46:24 - What a Decrease in IV Means for Vertical Spread Pricing
49:31 - The MYTH About Debit Spreads vs. Credit Spreads and Implied Volatility
50:47 - You ONLY Want Implied Volatility to INCREASE When...
52:31 - How to Select the Right Strategy (Some Guidelines)
54:08 - Using tastyworks to Compare Debit Spread vs. Credit Spread Setups/Pricing
1:02:22 - What Happens to Vertical Spreads at Expiration?
1:03:18 - Fully In-The-Money Call Spread at Expiration (Example)
1:05:17 - Partially In-The-Money Spread at Expiration
1:07:13 - Early Assignment Risk With Vertical Spreads?
1:08:26 - Debit Spread Early Assignment Risk: Why You Should Close the Trade
1:12:19 - THANK YOU! Please Subscribe/Like!

Thank you for watching! I hope you learned a lot in this video.

Questions? Comments? Suggestions? Please leave me a comment down below and I'll get back to you when possible.

==== ADDITIONAL RESOURCES / VIDEOS MENTIONED ====

[projectfinance]

I hope you enjoy this one! I know there was A LOT of information, but my intention was to push you. Please check the links in the video description above for the PDF to the video and for additional resources.

[andreikelly]

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[DELPHIIII]

You could charge a large amount of money for this depth of information. There's a lot of intrinsic value here...

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[ATLJB]

Everything you are doing is a 1:1 ratio.. What if you bought 2 call options and shorted 1. Would the profit be double? Like for the first example, the profit was 15 but if you bought 2 call options, wouldn’t that be double”30” So when you hit your price point, let’s say 80% then sell one off and let the other ride to see what happens. Would that work?

[djayjp]

Pro tip: you definitely SHOULD worry about assignment if the extrinsic value remaining is < a dividend amount. In that case, expect the probability of assignment to be 100%. 👍

[mpiresteve]

The 6 people that disliked this video have only lost money in the stock market, smh!

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[stefanklaus]

Thank you very much Mr joans Kaufmannfor successful withdrawal... I never believe we still have good and trust worthy account manager on Binary Options and Forex trade, I actually enjoy the fact that this days all I do is take care of my kid and wait for more money

[manuelguerrero]

Thanks a lot for this video, thanks, thanks, thanks. Everyone should leave a comment or at least click the like button, this is money for free.

[chebertjr]

Hi, I have been trading stocks off and on for 30 years, what would you suggest I do first to get into options?

[spencerhayes]

Who the hell downvotes a video like this 😂 Wish I had two more hands so I could give this video 4 thumbs up!

[richardmanfred]

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[mattydominic]

Dude, you're awesome. Understanding all of this is one thing, being able to explain it is another, having the WILLINGNESS to explain it is yet another. Thanks for making these excellent videos!

[druvaciam]

Great video. I need to use short call spread instead of just shorting calls. Shorting calls results in unpredictable margin requirements. I'm holding short $GME calls, margin requirements volatility is crazy, I have barely survived the last bull run-:)

[kangokidkidd]

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[santiagoeaston]

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[dancollins]

I'm new to options. But I don't understand why the multiplier isn't just applied to all given values that it would apply to, right out of the gate. Why do we say "this costs $10" when we all know you really mean $1000? Why isn't the full price of the option just displayed in the chain with the multiplier already factored in? Maybe this is something i'll understand further down the road. But from where I'm standing it seems like a lot of this stuff could be simplified greatly by just standardizing terminology across the market and presenting prices at their true value, all variables factored in. I'm probably missing something since I'm not that experienced yet, but getting into the market, the biggest hurdle was just understanding what is lingo/slang and what is textbook terminology.

More times than I can count while watching I yelled at the screen "do you mean THAT number or that number times 100?!"

Frustrating to keep up at first. But I do really like your videos they are very informative.