2. Trading
Ver+cals
In
smaller
sized
accounts
we
o6en
recommend
avoiding
higher
risk
trades
such
as
naked
selling
of
puts
and
calls.
Also,
we
encourage
keeping
the
variety
of
strategies
to
a
minimum.
3. Trading
Ver+cals
Today
we
are
going
look
at
a
defined
risk
strategy
that
is
an
effec+ve
way
to
make
a
direc+onal
play
on
the
market.
Because
the
risk
is
defined
it
is
especially
beneficial
in
smaller-‐sized
accounts.
4. Trading
Ver+cals
Ver+cal
spreads
consist
of
the
purchase
of
one
op+on
and
the
sale
of
another.
Both
op+ons
are
the
same
type
(both
calls
or
puts),
and
expire
at
the
same
+me.
They
only
differ
in
strike
price.
5. Trading
Ver+cals
Regardless
of
whether
a
ver+cal
spread
contains
calls
or
puts,
whenever
a
trader
buys
a
lower
exercise
price
and
sells
the
higher
price,
the
posi+on
is
bullish.
The
posi+on
becomes
bearish
if
the
opposite
is
done.
6. Trading
Ver+cals
These
are
great
strategies
for
smaller
accounts
because
even
with
a
large
market
move
the
delta
of
the
posi+on
will
not
invert.
A
bullish
play
remains
bullish
and
a
bearish
play
remains
bearish.
7. Trading
Ver+cals
When
we
trade
ver+cals
we
are
generally
sellers
of
premium.
We
look
to
take
in
a
credit
that
reflects
at
least
one
third
the
width
of
the
spread.
8. Trading
Ver+cals
So,
for
example,
if
we
were
looking
to
put
on
a
bullish
$1
wide
put
spread
we
would
look
to
collect,
at
a
minimum,
$0.33
on
that
trade.
9. Trading
Ver+cals
Ver+cal
spreads
are
just
one
of
many
op+on
strategies
available.
With
the
defined
risk
characteris+c
they
are
an
essen+al
basic
strategy
especially
useful
in
small
accounts.
10. Trading
Ver+cals
DISCLAIMER:
The
purpose
of
this
material
is
to
demonstrate
market
trading
techniques
and
strategies
designed
to
give
you
the
skills
and
confidence
to
manage
your
own
investments.
The
risk
of
loss
in
trading
securi+es,
op+ons,
futures
and
forex
can
be
substan+al.
You
must
consider
all
relevant
risk
factors,
including
your
own
personal
financial
situa+on,
before
trading.
Op+ons
involve
risk
and
are
not
suitable
for
all
investors.
You
are
assuming
the
en+re
risk
of
any
and
all
trades
placed
in
the
stock
market.
Due
to
the
+me-‐
cri+cal
nature
of
trading,
the
varying
fees
charged
by
brokerages,
and
the
ac+vity
of
other
market
par+cipants,
tastytrade
cannot
guarantee
that
similar
trades
you
place
will
mirror
the
exact
performance
of
the
tastytrade
porUolio.
tastytrade
is
not
a
licensed
financial
advisor,
registered
investment
advisor,
registered
broker-‐dealer
or
FINRA|SIPC|NFA-‐member
firm.
tastytrade
does
not
provide
investment
or
financial
advice
or
make
investment
recommenda+ons.
tastytrade
is
not
in
the
business
of
transac+ng
trades,
nor
does
tastytrade
agree
to
direct
your
commodity
accounts
or
give
trading
advice
tailored
to
your
par+cular
situa+on.
Nothing
contained
in
tastytrade’s
porUolio
demonstra+on
cons+tutes
a
solicita+on,
recommenda+on,
promo+on,
or
endorsement
of
any
par+cular
security,
other
investment
product,
transac+on
or
investment.
BY
USING
THE
TASTYTRADE
WEB
SITE
AND
ACCESSING
THE
TASTYTRADE
MATERIALS,
YOU
AGREE,
AT
ALL
TIMES,
TO
INDEMNIFY,
DEFEND,
AND
HOLD
TASTYTRADE
(INCLUDING
ANY
OF
ITS
AFFILIATES,
OR
ITS
RESPECTIVE
SUCCESSORS
AND
ASSIGNS,
OR
ANY
OF
ITS
RESPECTIVE
OFFICERS,
DIRECTORS,
EMPLOYEES,
AGENTS,
REPRESENTATIVES,
LICENSORS,
OPERATIONAL
SERVICE
PROVIDERS,
ADVERTISERS,
OR
SUPPLIERS)
HARMLESS
FROM
AND
AGAINST
ANY
AND
ALL
CLAIMS,
ACTIONS,
DEMANDS,
SUITS,
LOSSES
AND
COSTS
(INCLUDING
ATTORNEYS’
FEES)
RESULTING
FROM
TRADES
YOU
PLACE
IN
THE
MARKET.
TASTYTRADE
SHALL
NOT
BE
LIABLE
FOR
ANY
LOSS
OR
DAMAGE,
OF
ANY
KIND,
DIRECT
OR
INDIRECT,
IN
CONNECTION
WITH
OR
ARISING
FROM
USE
OF
EDUCATIONAL
SERVICES
PROVIDED
AS
PART
OF
THIS
PORTFOLIO
DEMONSTRATION.
