Call option debit spreads have several advantages over directional call option trades.
- Boosting the profit potential of the AMAT trade by 80%
- Reducing the dollar risk in the AMAT trade 48% from $778 to $403
- Providing downside protection that allows the AMAT trade to profit it the stock is up, down or flat at option expiration.
Whenever you can profit when a stock price increases, decreases or remains flat at option expiration it will result in a higher percentage of winning trades and this can make you a more successful trader.
When you buy a call option, the underlying stock must increase in price in order to profit from the call purchase. And at option
Option spread trades, however, can profit if the underlying stock is up, down or flat at option expiration giving option spreads a big advantage over directional trades.
In the video below learn how Chuck Hughes produced over $1.9 million in
The type of option order you use to enter and exit option and option spread trades can make a big difference in your option trade profitability. This is especially true for trading option spreads. Learn how option spread orders helped produce an average return of 98% for the option spread portfolio below.
When you purchase an option you need to have an option strategy. Options are considered a wasting asset due to the time decay characteristics of options. Out-of-the-money options consist of only time value. At option expiration options lose all time value. Buying at-the-money or out-of-the-money options is very speculative and there is a high probability that these type of options will expire worthless resulting in a 100% loss.
Due to the time decay of options, Chuck maximizes the intrinsic value and minimize the time value of an option when he buy's options.
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