Sentences with phrase «vertical call spread»

I started with a limit order on a debit vertical call spread, but decided to switch it to a...

Not exact matches

The so - called vertical spread uses income from selling the higher - strike contract to reduce the cost of the calls closer to the money.

Jeff, Hello from one Nerd to another Geek... stumbled upon your video on Bear Spread call (Vertical) and Bull Put spreads (Verticals) on you - tube..

Bear call spread and bear put spread are bearish vertical spreads constructed using calls and puts respectively.

If I believe a stock will go up, say from a price of $ 100, and I wish to execute an options strategy that would make me money if the stock were to rise, why would I want to setup a vertical spread when I could instead purchase a single naked call?

Question: are you saying that buying a call is better than buying a vertical spread regardless of fees, or only because of fees?

If the former, you are saying that buying a call and selling a vertical spread will always be profitable, which effectively means you're going short an out - of - the - money call.

While that's a good strategy, it doesn't guarantee profit, and will lose money exactly when the vertical spread is a better strategy than buying the call outright.

The most direct answer to your question in comments: if the stock goes down, you lose less money with the vertical spread than you do with a simple call.

It seems to me that my transaction costs would be 2x with the spread, and while I see that time decay (Theta) is mitigated with a vertical spread, wouldn't the unbridled upside to unlimited theoretical profit of the naked call be better in the long run if this strategy is executed multiple times?