Special Topic Option Strategies: Credit Spreads Brian Houston, Nison Cer0fied Trainer™ www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
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Brian has been trading stocks for over 37 years, and has devoted much of his trading career to trading options and creating options strategies. During that time, he has used Steve Nison's candlestick patterns and education to continually improve his knowledge and skills. Recently, Brian has has also added Elliott Wave theory to his set of trading tools, CFDs in Forex, Indices and Gold. Brian Houston, Nison Cer0fied Trainer ™ www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
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Your Favourite Market www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
Trader’s Slang • Bull Market • Bear Market • Support • Resistance • Trend www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
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The Mul1plier Effect Where a Nison candle signal confirms another indicator www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
Option Credit Spreads Bear CALL Spreads Bull PUT Spreads • A Credit is where the trade puts money into your account! • Remember, your broker will usually hold addi0onal money towards a possible trade gone wrong • In the same month • BUY a higher strike price BUY a lower strike price • SELL a lower strike price SELL a higher strike price • Ensure you sell the same number • Gains are limited to your credit www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
Option Credit Spreads Bear CALL Spreads Bull PUT Spreads www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
Option Credit Spreads • Poten0al RISK is also limited! • The spread on the strike prices – your credit Example: Buy GE Call $28 Strike = $0.30 Sell GE Call $26 Strike = $1.00 Credit = $0.70 $2 Strike difference – 0.70 therefore RISK = $1.30 www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
Option Credit Spreads • So why do we use Credit Spreads? • The market is not expected to move much • You want to limit your poten0al loss • But looking to scalp the market 0me premium! • Breakeven Bear Call Spread * net premium + lower strike price Bull Put Spread * higher strike price - net premium www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
Option Credit Spreads There are s1ll 3 Strategies – Calls Puts • In the Money (bearish market) Bullish • At the Money (neutral to bearish market) Bullish • Out of the Money (slightly bearish market) Slight bullish www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
Bullish Engul?ing Pattern at Support www.mycandlecharts.com www.candlecharts.com www.candlechartsacademy.com
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