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Option Spreads

What are Option Spreads?

An option spread is a type of complex options trade.

When option spread trading in the stock market, a trader can utilize one of two types of options trading strategies. They can either buy or sell an outright option or make a complex option trade.

An outright trade is a purchase or sale of an option on its own. It’s much more simple than a complex trade, which is why most options traders deal in outrights. A complex trade strategy involves option spreads.

 

 

Although option spread trades are more complex than outright trades, and they only comprise a small amount of trades in the options market, these types of trades can be extremely lucrative while reducing risk of loss.

However, trading option spreads requires knowledge of complex strategy. If you lack experience trading option spreads, or if you are seeking option spread recommendations for actual trades, call Chuck Hughes today at #(866)661-5664 or Contact Chuck to start trading option spreads for income!

Chuck Hughes Can Provide You with Option Trading Strategies

When entering the options trading market, it’s important to seek help from an experienced options trading strategist. Option spread trading requires in-depth option spread strategies. An experienced trader can help minimize your risk of loss and maximize your potential for profit.

Chuck Hughes has been trading options since 1986. He has personal experience in trading options and providing professional advice to a whole spectrum of traders; beginners hoping to get into the option spread market and successful traders looking to gain that extra edge. Chuck Hughes is familiar with the options trading market, successful as a trader in the market, and is experienced in trading option spreads.

Chuck is an eight time World Champion Trader and has won more awards than anyone else in World Trading Champion history. He started out trading in the options market with only $4,600 in his account. In his first two years of trading options, Chuck made over $460,000 in profits.

Trade Options with Chuck HughesChuck’s average profit-per trade is 235.9%. Overall, 94-100% of his trades have made a profit. Chuck has done this all by using a trading system that he developed himself.

Trading option spreads can be time consuming and frustrating- especially if you’re new to the options trading market. Using Chuck Hughes as your option spread strategist can lower your risk for loss and increase your chances for profit. Call Chuck Hughes today at #(866)661-5664 or Get More Info to start trading option spreads.

What are the Benefits of Option Spreads?

An outright trade involves a single contract in a single month, with a single expiration date. An option spread can involve multiple time periods and contracts, different strike prices, and various put and call dates. It’s easy to see how option spreads can become very confusing; even to experienced traders.

However, for all of the complexity of option spreads, there is a large upside to using this strategy to trade. Option spreads provide flexibility and power. For the same amount of risk as an outright option trade, an option spread can statistically increase a chance of profit.

The benefits of option spreads make the strategic investment worthwhile. However, novice traders oftentimes overlook important insights into option spreads. Many people feel uncomfortable trading option spreads because of the intricacy involved in this type of trade.

By using Chuck Hughes’ advisory services, you can learn option trading strategies. Chuck Hughes will even give you option spread trade recommendations so you can forego the time-consuming research. Call Chuck Hughes today at #(866)661-5664 or Contact Chuck to get involved in the option spread trading market!

Is There Risk Involved in Trading Option Spreads?

The risk of option spreads should be calculated using ‘The Greeks’. The Greeks are a set of terms used to calculate different forms of risk: delta, gamma, vega and theta. These terms should be used to help calculate the risk of option trading strategies.

Delta and gamma measure the movement of stock prices. Delta is represented as either long or short. Vega measures the volatility of the stock. Vega is also represented as either long or short. Theta measures time decay. Theta is represented as either positive or negative.

There is risk associated with trading option spreads. To reduce your risk of loss, get advice from an option spread trader who has both experience and success in the market. Call Chuck Hughes today at #(866)661-5664 or Get more Information to reduce your risk of loss and maximize your potential for profit in the options trading market.

What are the Different Option Spread Strategies?

There are multiple option spread strategies. Each strategy is designed for different markets (bullish, bearish, or neutral) by using different methods. Option spread strategies include calendar spreads, horizontal, vertical and diagonal spreads, and credit and debit spreads.

Learn about Option SpreadsOption spread strategies vary in their use of option contracts; known as legs. Option spreads typically have two legs, but they can have more. Option spread legs correspond with time variations of calls and puts; either long or short strikes.

Each type of option spread is unique in its risk and ROI (return on investment) potential. They all require intricate strategy in order to minimize risk and maximize profit potential.

Calendar Spread Option

The calendar spread is designed to capitalize on time decay. All options involved in a calendar spread will be identical in their underlying stock and have the option to have the same strike price. However, they will all have different expiration dates.

Typically, long calendar spreads provide lower risk trading opportunities. Calendar spreads decline in value if their underlying stock either greatly appreciates or greatly depreciates.

Horizontal Spread Option

A horizontal spread is a type of calendar spread because it is based upon the value of time decay. Its spread will hold the same strikes but its legs will buy and sell at different times and across different time periods. Potential for profit and risk of loss is different for a horizontal spread versus a vertical spread.

Vertical Spread Option

A vertical spread involves a spread of options that are bought and sold at the same time. All of the options in the spread are the same type and have the same expiration date. However, they all have different strike prices.

A vertical call spread is typically associated with lesser risk. The amount of profit gained by a vertical option spread is determined by how great the difference is between the option premiums of the two positions taken.

Diagonal Spread Option

A diagonal spread is a combination of a horizontal spread and a vertical spread. The horizontal aspect of the diagonal spread has to do with the differentiation in expiration dates. The vertical spread aspect has to do with the differentiation in strike prices. This means a diagonal option spread has two of the same type of options which both take a long and short position, but they have different strike prices and different expiration dates.

Credit Spread Option

A credit spread is also known as a credit risk option. The strategy taken involves buying the same type of underlying stock or security. However, they are bought at different strike prices; one option is sold high and one option bought low. Profiting from a credit spread is dependent upon whether the spread narrows.

There are multiple types of credit spreads. Popular strategic credit spread options involve short butterflies, short condors, iron condors and iron butterflies.

Debit Spread Option

A debit spread involves two options with the same underlying security and same strike prices; but with different market prices. One option is sold low and one option is bought high. Profiting from the trade is dependent upon whether the spread widens. A debit spread always involves an initial loss. However, the trader is betting on the fact that the highly priced purchased option will continue to rise in price.

Become a More Successful Option Spread Trader with Chuck Hughes

Start Option Spread TradingOption spread trading is a complex strategy in the options trading market. With the large amount of different types of option spreads available, it’s important to use and to understand option spread strategies.

If you are new to the options trading market, it’s important to learn how to trade option spreads from an experienced, professional and successful option spread trader.

Even if you understand one option spread strategy, it’s wise to invest in education for other methods. Each strategy is designed to be used in unique market situations and each offers different risk and profit potential.

The fastest way to increase your chance of profit is to use a professional investment advisory service. By using Chuck Hughes’ options advisory service, you can receive actual trade recommendations.

You’ll not only be learning the trade, but gaining investment tips and strategy from a world-renown options trader. Chuck Hughes is an experienced and successful options trader. With Chuck Hughes’ help, you can lower your risk for loss and increase your chances for profit when you trade option spreads. Call Chuck Hughes today at #(866)661-5664 or Request More Information to make your profit by trading option spreads. 

Futures trading involves high risks with the potential for substantial losses. Hypothetical performance results have many inherent limitations, some of which are described as follows. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. there are numerous other factors related to the markets related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. Option and stock investing involves risk and is not suitable for all investors. Only invest money you can afford to lose in stocks and options. Past performance does not guarantee future results. The Chuck Hughes Inner Circle Advisory trade record does not represent actual investment results. Trade examples are simulated and have certain limitations. Simulated results do not represent actual trading. Since the trades have not been executed, the results may have under or over compensated for the impact, if any, of certain market factors such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.