How To Trade Option Spreads In 5 Minutes

📣 FREE OPTIONS TRADING MASTERCLASS | skyviewtrading.co/3WA6ret
If you want long term trading success, you HAVE to learn how to trade option spreads. These can be very intimidating and boring to learn... until now.
I created this video that should teach you the basics of option spreads in 5 minutes. Watch this 5 minute video and get started learning why spreads are an absolute must. Enjoy, and let me know if you still have questions!
☁️ Visit Our Site: skyviewtrading.com
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option trading
options 101
option spreads
vertical spread
calendar spread
strategy trader
how to
trade options
credit spread
debit spread
calls

[@skyviewtrading]

🚨 Hey all, thanks so much for the great feedback on these videos! For those of you requesting more content, we put together an Options Trading Masterclass for you, 100% free. We dive further into our strategies and trading style. If you’re interested, check it out here - skyviewtrading.co/3WA6ret

[@miguelaugusto8479]

doesnt work :(

[@bd5866]

Thank you!! Watched after 7 years!! :)

[@skyviewtrading]

Thanks for watching!

[@Damian-um7mv]

I have seen all your other videos and i really think that you are a very good teacher . Thanks

[@skyviewtrading]

Thank you for watching!

[@chibuzochilaka4798]

You are such a fantastic educator. What I learned by watching your videos are unbelievable. Thank you so much.

[@skyviewtrading]

Really happy to hear that :) Thanks for sharing! Make sure to check out our website. More free videos on there that you won't find on KZbin!

[@kurniadharmawan7542]

I have seen somenof your videos and they are superbs. Keep them coming...

[@skyviewtrading]

Thanks for the feedback. More coming soon!

[@jasonavina8135]

subscribed immediately! Such a good explanation! I've read so much on this and this is one of the best explanations out there!

[@jeremyb239]

that. was. awesome! thanks for the class!

[@srf2112]

Thank you for this. I just had an "aha" moment in my young options trading career. The strategy of trading high probability, lower reward plays is the fundamental key to becoming consistent profitability. Once that is attained you can scale up to whatever reward level you desire while still minimizing risk. It's true, it is much easier mentally and realistically to guess where an asset will generally probably not go as opposed to exactly where it will. Simple and unarguable.

[@skyviewtrading]

🙌

[@TheArtOfTrading]

Brilliant stuff man

[@osme03059]

Love your videos! keep them coming Adam!

[@skyviewtrading]

+Oscar M Thanks Oscar! We definitely will! :)

[@opufy]

short and sweet! best video ever

[@josephmaurno2349]

Excellent class and very well explained.

[@yahawashiisking441]

Thank you!!!

[@codynautic]

Great video, I will try this soon.

[@tuff47]

Thanks for your work.

[@chiragchudasama4056]

very unique, appreciate your logic boss

[@Tripl3333]

I think this is the first time I am starting to understand...Options. thank you. A New Subscriber.

[@skyviewtrading]

Welcome! Thanks for the sub!

[@ravirai4828]

Just love your videos :)

[@farealwitit7947]

Neat strategy. Ty so much!

[@JavonniAtiyya]

After weeks of research and hours of learning, these videos are by far the best.

[@dontblame2224]

Correct!!!

[@Steven-yd8wy]

thats awesome, thanks!

[@everydayathletetrainingcen6578]

Your videos are awesome thanks so much

[@skyviewtrading]

+Everyday Athlete Training Centre Awesome, glad you liked them!

[@Mabeylater293]

2:10. What formula did u use to determine your probability of profit? Thanks!

[@MGISLLL]

Hello Adam Excellent video! At 2:10 of video, you said probability of success is 35%. How do you compute that? Thks

[@jadenweed922]

I don’t know the math behind it, but I believe most big brokerages will auto calculate it for you

[@codyhall9303]

Question about gain percentage: Is it correct that the gain percentage is (Max Profit)/(Max Potential Loss)? Or should the amount of capital you have tied up in the order (through margin) be taken into account?

[@robertfeifer960]

Your the best!

[@aGr3atD4y]

great vid!

[@skyviewtrading]

Thank you!

[@Mabeylater293]

2:24 I’m a little confused how you buy the call for $2.10 when on the screen it says $2.07. Do u have to add $.02 whenever u buy a call or something? Thanks! And your presentation style is AWESOME!!

[@farawayskies]

Super cool. Now let me watch this again and again until I understand.

[@skyviewtrading]

You got this!

[@Jay-fe7dc]

How do you calculate the 35% chance of the stock going up?

[@hadassah22]

Do you have to look at the Greeks when you’re doing vertical spreads? Will they help us choose the right strike price when applying the vertical spread method? I love your videos btw. The animation and explanation makes it so easier to understand.

[@skyviewtrading]

Thanks so much! Yes we do keep an eye on the greeks when managing our positions!

[@mhdelmurad2165]

Tanks

[@stevek8260]

Thanks for the video...and all the other great ones. At the 2:10 ish mark how did you determine a 35% probability of profit?

[@RapeGrownMen]

Steve K I was wondering same thing lol

[@kingsleylaurent562]

In the video, he made called " when To cut losses trading options, " he explains it. I just saw it and thought about your question. Hope this helps.

[@franksaney2390]

1 question. What happens on expiry of the option? Do I have to close the contract or it happens automatically? For instance, if I'm on vacation or at work, and let's say the guy whom I sold a call to, exercises his option. Do I have to manually exercise my call option to cap my loss or will it happen automatically?

[@emilypark6169]

So could I do this but opposite? For example I don’t think ulta stock will go below $180, is there a way to trade options to capitalize on this?

[@ycs2669]

Do you have a platform or tool that can be used for options trade in India too? if yes, pls share the info

[@shamiekgivens375]

Sorry if this is a dumb question, but wouldn't you have to buy a contract at a different strike price first before you can sell it? A vertical spread is basically when you buy an option contract that at one strike and then you sell another contract at a different strike price, correct? If so, how would you sell a contract that you haven't bought?

[@betsfn8499]

im confused on the selling the other call part , do i buy both at the same time or how do i sell it if i dont own it , i use robinhood and tastyworks

[@engineer1able]

Selling a call means you write your own call and get paid the premium for it when someone buys it. If the price of stock goes above the strike price on the call you sold, you can be then assigned the call and be forced to sell the shares of stock at the strike price to the buyer of the option, ie when the buyer exercises the option. Robinhood prevents you from selling a call unless you own enough shares of the stock.

[@duckdodgers]

which option do we purchase first? the buy or the sell or does it matter?

[@kunalamin8]

Could please explain What is the meaning of (not including possible dividends risk) ?

[@GarYcoolZ]

What trading platform do you use ?

[@syed1647]

Nice video with good option strategies. Do you have any good strategy in EQUITY CASH INTTADAY too??

[@skyviewtrading]

+Syed Thanks for the note! I believe the market is very efficient which makes it near impossible to make money in the long-term unless you are incorporating options into your trading. Research strongly suggests this is true. Why don't you just focus on options? :)

[@johnottr]

When doing this spread do you buy both ends to open or to close?

[@skyviewtrading]

alwaysmylove you buy to open one option, and simultaneously sell to open the other option.

[@behno2947]

What do u thing of the App "+500" ?

[@Fishing4moby]

thanks for these videos on options they are a big help. any books you may recommend to further my knowledge on option trading?

[@skyviewtrading]

+baja1776vw We don't recommend any book specifically about options trading because most of them don't talk about the edge that we trade with. Swing over to our website and take a look, we can help with your knowledge gain :)

[@llclassifiedll8179]

This is crazy cause AAPL is literally at 127 right now🤣i am about to use your strategy

[@colombiancs]

I have a question, might be basic; when you say buy a call at a certain strike price and sell a call at another strike price, what call are you selling exactly? I understand buying a call, I understand buying a put, but I don't get when you say buy a call at a certain price and sell a call at a certain price. Are you assuming you have calls purchased already that you are selling, or are you selling the call you just bought?

[@Sam-bp8gk]

Different strike prices

[@tomdainguyen]

Do you have any video for Bear Put Spread?

[@skyviewtrading]

kzbin.info/www/bejne/Z4S5pKqOZ7uSrKc There you go. In that one we explain the Long Vertical Spread. (aka Bull Call Spread or Bear Put Spread). We don't like the term "Bear Put Spread" as it just makes things confusing for people trying to learn. We call it the Long Put Vertical Spread. But either way. That video explains the Long Vertical! Enjoy :)

[@tomdainguyen]

I see, So there are 2 types of Vertical Spread . 1 is Long Call Spread and another is Long Put Spread? And how can I exit before the expiration date when it makes profit?

[@rodl6759]

My first day learning about options , so let me just confirm if i'm getting right if not please correct me i'll appreciate it, so basically what an option does is you predict if the stock will go up or down (puts), (calls) Let say a stock is selling for 100 and i buy a call at 105 (at anytime of the day that i believe it will rise to that amount because of my strategy with the graph and the information that a company has put out etc... I will make profit from this correct ? same goes with the PUTS ..stock selling at 100 and i buy a PUT for 98 and it does go down to 98 and i decide to trade that PUT for income ? is this how it all works ? also lets go back with the PUT for 98 what if does the opposite rises up to 102 , i could trade the PUT if i start to see its going up from the 101 mark ... i cut my losses short ? Thank you for anyone who replies to this .... AND BTW i love your videos so far they have been really helpful , i will continue to watch these everyday .

[@husklez]

How can you sell and option when you don’t own that option to begin with for option spread? I’m new so it’ll be nice for some clarification.

[@MakingMackenziee]

Husklez I have the same question! We must be missing something! 🤯

[@wisconsinboy9688]

Its time to make some money now

[@MT89259]

How do you know when to end the trade? If apple never goes over 130 in your example, do you just wait for the expiration date? How do you determine which expiration to choose?

[@skyviewtrading]

Good question.. This video is meant to be a very basic video so we didn't really cover much of that stuff, but we do in our other videos (so check them out!). In short, many traders DO wait for the expiration date and try to receive max profit on their trades. We actually rarely do that. We opt to take profits as they present themselves. This allows us to achieve accelerated returns (10% ROC in just 10 days is much better than 15% in 30 days for example), and also allows us to increase our win percentage of our trades. And as for expiration, we tend to trade in the range of 30-60 days. Hope that helps!

[@richardwong8100]

How to join your member

[@sarmatiancat-a-phract8705]

"Maybe you've even traded options before. Now it's time to learn about spreads." lol. great video though.

[@velwear]

Nice, video but just wish I was able to comprehend these numbers and spreads. This is just all too confusing to me. Plus, I’m just getting started with learning how to do this stuff.

[@ucctgg]

Replay them over and over

[@kingsleylaurent562]

Yeah. Replay the hell out these videos. It will click trust me

[@globalcitizen7]

Why not calendar vertical spred??? If apple stays at breakeven!

[@Leeroym75]

So how do you lose money then? Do I lose money only if the stock price goes above my strike price? Can I lose money if the stock plunge into the ground? Because if not can I just sell way out of the money calls and profit?

[@jayfowler1370]

Video is great! But I pay to much in fee they take all my money that I make

[@skyviewtrading]

+Jay Fowler Commissions will eat you up if you aren't trading correctly or you have too high of rates. Send us an email and we'll try to get you our rates on TDAmeritrade if you open an account with us. [e-mail]

[@slinkkkcrown6061]

my question is how is the profit limited? the stock could burst over the break even price of a call or put and you will be able to make easy money. how is the profit limited?

[@torijenna1629]

@Matt DeLong Nope...he purchased a call at 37 giving him the ability to purchase the stock at 37. In case the the call he wrote at 38 is exercised and the person who purchase the call at 38 exercises his ability to buy the stock at 38. Then he would exercise his right to buy the stock at 37 covering the 38 call that was written. So if it goes above 38 he is covered and if it goes below 38 twitter it just does not exercise the call at 37 leaving the small 1 dollar spread which limits his profitablity to .52 cents and loss to .48 cents.

[@Cass2kX1]

what happens if we sell a call and it gets exercised?

[@slinkkkcrown6061]

then you simply have to deliver 100 shares (assuming it was only one contract) to the buyer. if its not covered and the stock sky rockets you could lose a lot. your loss is unlimited theoretically, so whenever you're selling calls make sure its covered. you don't want to lose money ;)

[@skyviewtrading]

You'll have to deliver the 100 shares per every 1 call that got exercised (as slinkkk crown mentioned)... so if you're long shares, you'll just sell them. If you aren't long shares, you'll now be short shares... If this happens, you can simply close the stock position at the current market price and no harm no foul.

[@MattsPath]

When the position is closed at market, does that leave you exposed more than the original calculated risk?

[@boudreauxish]

Sky View Trading wait I was thinking when using options spreads you wouldn’t have to buy 100 shares just so you can sell them. I was under the impression that that’s why you buy a call and sell a call. Your covered both ways. Is this not how it works?

[@boudreauxish]

Sky View Trading 2 months later still no answer? Why do people who make videos like this claim when you do these you can’t be assigned while other say you can? I understand the spreads but I don’t understand the rules, do you have to buy 100 shares just to sell them back? What if you don’t have the money in your account then what happens? Also can you close/sell the position before expiration? If so what happens? Do you loose the credit you were given? What about any collateral you may have had to put up?

[@Discovery_and_Change]

0:46 What is an option spread?

[@skyviewtrading]

Hello! An option spread combines multiple strikes into one trade. For example, a short call AND short put together is an "option spread." One option helps "spread off" the risk of the other option. I hope that helps!

[@mwpunk182]

Can you please explain the math behind the things demonstrated in this video? Where are you coming up with these percentages and so on?

[@skyviewtrading]

If you're talking about the Probability of Success percentages at around 2:05, well, those are mostly just an estimation. However, you can check out our Analyze tab video to see how you can view an exact Probability of Success number of any trade on the thinkorswim platform. Also, if you haven't already done so, you should watch our 2 recent Vertical Spread videos... We explain the Vertical Spread strategy in depth in both of these videos. I'll link them below: kzbin.info/www/bejne/Z4S5pKqOZ7uSrKc kzbin.info/www/bejne/bJCThJWIlq2pZ7c

[@cristinskadell338]

The background music is distracting, otherwise, it is a clear and well thought out presentation.

[@skyviewtrading]

Cristins kadell thanks for the feedback! We turned it down a little on our newer videos. Would you mind checking those out and letting us know if the music is distracting on those as well? --thanks!

[@TheSjh196]

actually liked the music

[@JohnDoe-cu2zb]

I love the music, which BGM is it ?

[@JohnDoe-cu2zb]

I remember it from person of interest :)

[@mynazx]

@@JohnDoe-cu2zb Glitch Mob

[@jgjmia]

I've been practicing doing spreads on paper trading but not possible when I try with real money because it says "I don't have enough cash/buying power". Just doing a credit vertical spreat with 1 contract on SPY requires $40,000 in your account of "buying power". I really like trading spreads so, Does anyone have any idea if I'm doing something wrong? Thanks

[@carolinebevans]

you may already know by now but, the amount of collateral is going to be whatever your spread is x100. For example, if your call spread for SPY is 400/403 then your collateral would be $300 since it’s a $3 spread. I started building my account from $800. only was able to do 2 contracts…then 4 weeks later i’m at $3500. so you can slowly build from starting with very little money!

[@roywilliams3560]

if you bought the call at 37 why do it have to go to 39 to make a profit

[@skyviewtrading]

Because at expiration, there will be no time premium (aka extrinsic value) left on the option. So the option will only be worth the price of the stock minus the strike price (intrinsic value). Hope that made sense

[@gp5]

Don't you have to own the stock in order to sell options?

[@skyviewtrading]

+gp5 Nope! Sure don't!

[@gp5]

Sky View Trading Wow thanks, all this time I thought that in order to set up iron condors or butterflies that the stock had to be owned first. Thanks

[@TheBiopix]

I dont get it. How can you sell something that you didnt buy?

[@vortical911]

because it is stupid like that ;) welcome to the financial world

[@roywilliams3560]

But to buy and sell a call wouldn't you to own the call your trying to sell like your example if you buy the call at 37 and to sell the 38 call wouldn't you have to own it first

[@skyviewtrading]

Nope, sure don't. There are two sides to every market. Just like you can short sell a stock, you can also short sell an option. With options, we say "buy to open" or "sell to open". So in the example: you'd be buying to open the 37 call, and selling to open the 38 call. And we treat that all as one trade which we call a "Vertical Spread". With that information, the video should make much more sense. So definitely watch the video again! 👍

[@Lucky-ut9tj]

Can someone please explain me how can we sell the options at forst place when we don't even have the options? In simpler words how can we sell something that we don't even have?

[@ProtoForte]

i'm guessing he meant to short it

[@kingsleylaurent562]

It's contracts that you're setting up. If the contract gets exercised then

[@robertizzo1106]

S3f

[@dontblame2224]

So simple aye?

[@spikeyspike79]

how can you buy for $2.1 if the Ask price is $2.12...

[@skyviewtrading]

Hello. You could put your order in at $2.10 and wait to see if the market trades to your limit order.

[@mrjakkiebah]

Imagine you bought twitter hahahahaha

[@mrjakkiebah]

and aapl not above 130 lolol

[@Picwajzzz]

I am glad i did not get twitter lol

[@lanewoltz7388]

ya i still dont understand spread bro

[@micahwatson9017]

I’m from 7 years in the future and Twitter is no longer publicly traded and Apple is still trading at $27/share. 😂

[@skyviewtrading]

haha wow, what is Bitcoin at? =]

[@spikeyspike79]

if you are bullish on Twitter you would buy shares of Twitter not some shenanigans options.

[@skyviewtrading]

Hello. It all comes down to personal preference based on the tradeoffs involved. For example buying shares of stock vs selling a put. Both are bullish. The shares of stock give you the chance to make more money assuming the stock skyrockets higher. The tradeoff to that is the short put has a higher probability of profiting and could even make money if the stock moves sideways or even a small move lower. It doesn't necessarily need the stock to move higher to make money like buying the shares of stock would. Hope that helps!

[@WillShredForBread]

Cant stand the 5 second loop of music

[@JC-ji1hp]

This is library of congress level content

[@skyviewtrading]

Thanks for the kind words!

[@ricardo1957]

It would be even better without the unnecessary and annoying background noise.