Trading Vertical Spreads. There is Only One Variety

Traders use the following terms:

    –bull call spread
    –bear call spread
    –bull put spread
    –bear put spread

Each seems so descriptive of the given trade that no one complains that these using this terminology makes it far more difficult for the average options trader to understand how options work.

Add to that the extra complication of deciphering the difference between buying the bull call spread and selling the bull all spread.

Here’s a far better idea for you. If you have any difficulty figuring out how to trade spreads effectively or if the terms above are confusing, here is Part I of a basic lesson on trading spreads. It is based on the principle that there is only one vertical spread.

You can buy it or sell it; you can use puts or calls. Just know which bet you want to make and choose appropriate options. This concept is fully explained in Parts II and III.

View Video

Part II tomorrow.


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