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Bull put spread optionsxpress coaching


To this point, you've assumed the obligation to buy the stock for $75 per share, and you've purchased the right to sell the stock for $ per share.

Bull Put Spread Explained | Online Option Trading Guide

For aggressive investors who have a strong feeling that a particular stock is about to move lower, long puts are an excellent limited risk, high-reward strategy. Rather than opening yourself to enormous risk of short selling stock, you could buy puts (the right to sell the stock).

Option Spreads Explained | The Options & Futures Guide

Slight, all other things being equal. Since the strategy involves being long one call and short another with the same expiration, the effects of volatility shifts on the two contracts may offset each other to a large degree.

OptionsXpress | Educational Hub

For aggressive investors who have a strong feeling that a particular stock is about to move lower, long puts are an excellent limited risk, high-reward strategy. Rather than opening yourself to enormous risk of short selling stock, you could buy puts (the right to sell the stock).

Once the trader new to options grasps basic option-buying and selling strategies (discussed in Naked Call Writing and Going Long on Calls ) as well as important pricing dimensions (see The Importance of Time Value and The ABCs of Option Volatility ), it's time to move to an intermediate level of trading knowledge. This article introduces the vertical credit spread which comes in two shapes: the bull put spread and the bear call spread.

If an option spread is designed to profit from a rise in the price of the underlying security, it is a bull spread. Conversely, a bear spread is a spread where favorable outcome is attained when the price of the underlying security goes down.

Early assignment, while possible at any time, generally occurs only when the stock goes ex-dividend. Be warned, however, that using the long call to cover the short call assignment will require establishing a short stock position for one business day, due to the delay in assignment notification.

As with the Bull Put Spread, a Time Diagonal Spread requires that you consider a stock trading in a general sideways pattern. The advantage to the Time Diagonal Spread is the additional time it allows for your intended play to work to your advantage.

In the event the stock price falls below the strike price you sold, you may want to act quickly to back out of the trade by placing a buy-to-close order with your broker to remove your obligation on the Put you sold and avoid being assigned the stock.

Horizontal or calendar spreads are constructed using options of the same underlying security, same strike prices but with different expiration dates.


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