Option Spreads on the Option Insider

Found another website with a good explanation of option spreads called the Option Insider

I really like his explanation on how to remember what to sell and what to buy when trading spreads. It is easy to remember and something i never thought of…

The risk/reward characteristics of the spread will depend on the price and the strike prices of the options you buy and the options you write. You have all heard “buy low, sell high if you are bullish.” This adage can help you remember how to structure your spreads.

Bullish: Buy Low and Sell High. In a bull spread, the investor simultaneously buys the lower strike call (or put), and sells the higher strike call (or put).
Bearish: Buy High and Sell Low. In a bear spread, the investor simultaneously buys the higher strike call (or put) and sells the lower strike call (or put).

The site is very well done. It still has option jargon that is difficult to understand for the newbie but even on my blog here the same thing applies. We can’t always cater to the newbie, at some point in time you are just going to have to learn the language of options if you want to learn how to trade them properly.

For those of you with trouble learning the jargon I will recommend - Investopedia for all your answers. Just type in the word you do not understand into the search function at the top of the site, hit enter, and it will spit a list of possibilities of answers.

Back to the Option Insider - he has a three part series going on giving a good basic overview on trading option spreads and the differences and similarities between credit spreads and debit spreads. Good blog - Check it out —> Option Insider

credit spreads, debit spreads, option spreads