January 13, 2009

How can I use the call spread in an option trading?

option trading
Tessie asked:


I just learn option trading and I don’t know how to use the call spread. Any ideas? Thanks.

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Comments on How can I use the call spread in an option trading?

January 13, 2009

zman492 @ 1:32 pm

First you need to understand there are many different types of call spreads. The simplest is probably a bullish vertical call spread. Here are two examples of one:

The next simplest is probably a Short Out-of-the-Money Vertical Call Spread. Here is an example of one:

There are any number of other call spreads possible, including calander spreads, butterflies, condors, christmas trees, ratio spreads, backspreads, diagonal spreads, etc. The best way to learn about them, IMHO, is to read a good book about options.