Class: Introduction to Spreading
Reference Materials
- Options - Essential Concepts & Trading Strategies, edited by The Options Institute, McGraw-Hill 1999: pages 79-105
- Options For The Stock Investor, James B. Bittman, McGraw-Hill 1997: pages 97-125
This class will introduce you to the concept of "spreading." We will cover the use of basic bullish and bearish call and put spreads - i.e. simultaneously purchasing and writing calls (or puts) with different strike prices. We'll investigate how and why the potential risk and reward profiles for these strategies differ from those of simple long calls or long puts. You will also see what might motivate an investor to use simple bull or bear spreads.
Chapter 1 - Introduction
Introduces the user to the basic characteristics of vertical spreads with graphs, examples and terminology.
Chapter 2 - Bull Call Spread
Bull Call Spread strategy with examples, graphs and terminology.
Chapter 3 - Bear Call Spread
Bear Call Spread strategy with examples, graphs and terminology.
Chapter 4 - Bear Put Spread
Bear Put Spread strategy with examples, graphs and terminology.
Chapter 5 - Bull Put Spread
Bull Put Spread strategy with examples, graphs and terminology.
Chapter 6 - Conclusion and Review
Review of key points.
Quiz
Test your knowledge.