MONEY GLOBE XOptions Strategies & Greeks · Lesson 4
Vertical spreads
Defined risk, defined reward
Professional - Gold & Platinum
In this lesson
Build bull call and bear put spreads and calculate their cost, maximum profit, maximum loss and break-even.
Key takeaways
- A vertical spread buys one option and sells another of the same type and expiry, different strike.
- Debit spread: max loss = net cost; max profit = strike gap − net cost.
- Bull call spread profits from a rise; bear put spread from a fall.
- Defined risk makes spreads easier to size than naked option selling.
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Next lesson: Volatility skew and term structure
Educational information only - not financial advice.
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