Debit Spreads: Ninth Lesson

________________________________________________________________

EDUCATION ONLY

________________________________________________________________

Focus only on minute one to six and a half of the video to cover Debit Spreads.

The narrator alerts investors about Robinhood’s report error.

Lesson 5 covers Call Debit Spread. When you close the option, Robinhood asks if you want to receive a debt or a credit. Enter a credit.

The maximum gain is 100 times the difference between the sell and the buy strike prices when the security price at maturity date is higher than the strike price of the sell order.

The investor has a partial gain when the security price a maturity date is between the strike prices of the call and the sell orders.

The investor loses the option premium when the security price at maturity date is lower than the strike price of the buy order.

________________________________________________________________

An investor buys a Put Debit Spread when he is bearish on a security.

To Open a Put Debit Spread

Buy a Put

Sell A Put

Create a Buy Put and immediately a Sell Put with a lower strike price.

Both puts have strike prices lower than the equity market price.

Review the Put Debit Spread before entering it. Ensure the desired maturity date.

The maximum gain is 100 times the difference between the sell and the buy strike prices when the security price at maturity date is lower than the strike price of the sell order.

The investor has a partial gain when the security price at maturity date is between the strike prices of the call and the sell orders.

The investor loses the option premium when the security price at maturity date is higher than the strike price of the buy order.

________________________________________________________________

This entry was posted in English and tagged . Bookmark the permalink.