Debit Spreads
$Tesla (TSLA.US)$
Not sure why many New Option Traders DONT trade Debit Spreads???
- Less Expensive
- Less Risky
Many times you can still profit even if the stock is going the opposite way than your trade!
When the Market opened today, I Purchased (5) of the 04/29 $900 Puts and Sold (5) of the 04/29 $895 Puts.
Instead of paying $695 for Each $900 Put (5 x’s 695 = $3,475 total), I only paid $45 for Each Spread ($225 Total) bc I sold (5) of the 895 Puts for $580 each (5 x’s 580 = $2,900 Total)!
Asyou can see, I’m in Profit even though both Puts lost Value! That’s bc the Puts I purchased are closer to ATM then the Puts I sold! Plus, the Puts I sold are being affected by THETA a tad bit more than the Puts I Purchased.
Now, if you purchased any of these Contracts this morning by itself, you would have spent A LOT of money and be in the Red!
Not sure why many New Option Traders DONT trade Debit Spreads???
- Less Expensive
- Less Risky
Many times you can still profit even if the stock is going the opposite way than your trade!
When the Market opened today, I Purchased (5) of the 04/29 $900 Puts and Sold (5) of the 04/29 $895 Puts.
Instead of paying $695 for Each $900 Put (5 x’s 695 = $3,475 total), I only paid $45 for Each Spread ($225 Total) bc I sold (5) of the 895 Puts for $580 each (5 x’s 580 = $2,900 Total)!
Asyou can see, I’m in Profit even though both Puts lost Value! That’s bc the Puts I purchased are closer to ATM then the Puts I sold! Plus, the Puts I sold are being affected by THETA a tad bit more than the Puts I Purchased.
Now, if you purchased any of these Contracts this morning by itself, you would have spent A LOT of money and be in the Red!
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