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Width of Vertical Spreads

Width of Vertical Spreads

Released Wednesday, 12th August 2020
Good episode? Give it some love!
Width of Vertical Spreads

Width of Vertical Spreads

Width of Vertical Spreads

Width of Vertical Spreads

Wednesday, 12th August 2020
Good episode? Give it some love!
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One advantage of vertical spreads is they are smaller trades than naked positions and the narrower the spread the lower the buying power requirement.

New traders may be misled by the lower buying power of tight vertical spreads relating to lower risk, but when comparing these differently sized trades, it’s important to normalize by this buying power amount. One way to compare these trades is to look at the return on capital.

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