How to Use the Spread Hacker
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Even if the trade works against you by a certain extent, you still win. These are not bad gains, especially for beginners, smaller investors and the risk averse. When you sell a credit spread, you simultaneously sell one option and buy one option for a stock as a single transaction.
The options are traded for the same expiration month, with different strike prices and are either both call options or both put options. You sell the more expensive option, and buy the cheaper option, resulting in a credit to your account. It is quite a strong trend, so you feel secure in placing a trade. Best binary options trading system review vertical spreads immediately collect the money for this sale.
All you need to do is wait for the option to expire a month later, and you get to keep the money! If your trade goes against you, and you have sold an option without protection i. You will be obliged to either sell the stock at the strike price if you sold a callwhich means you first need to buy the stock at a higher price if you are ITM and then sell it at a lower price. Or you will be obliged to buy the stock at the strike price if you sold a puteven if the price of the stock is much lower than that price.
This means you must have the money available to do that, and your broker requires a pretty high margin to cover your risk. You therefore buy an option at the closest next strike price as a cover or hedge against your trade going wrong. Even before you get into the trade, you are protected! You have an upfront credit, and you have a very clear idea of how much you can potentially lose.
Here's Best binary options trading system review vertical spreads - step by step instructions for trading a credit spread. Here is a page with some real live trade examples.
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You can start with a small initial investment and steadily make it grow in way that most investors only dream of. I recently found a new trading course! This exceptional video course takes you step by step through many different strategies, all using live trades on a well known trading platform. What is a Credit Spread? Here is an example: Why buy the further out option?
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