Alternatives include dangers and are not appropriate for all investors. Before trading, read the Options Disclosure Document:.

Trading choices can be risky, but there are methods you can build to define your risk and your reward, like the brief put vertical, likewise called the bull put spread, short put spread, credit put spread, to name a few names. This strategy is based on a pretty basic concept: Offer one put to possibly profit from a stock going up, but also purchase another put at a various strike, which may offer some protection in case it doesn't.

You can utilize this method to specify your optimum gain and your optimum loss from the start. It's a strategy that offers a lot of flexibility: You could potentially benefit if the underlying moves up a lot, goes up a little, drifts sideways, or even if it drops a bit. However you can still lose if the underlying stock's cost falls too far. There's also the threat of unanticipated exercise or project.

We'll also stroll through how to utilize our thinkorswim ® web platform: trade.thinkorswim.com.

0:00 Introduction: Spread methods
1:45 What is a brief put vertical?
2:47 Why consider this method?
4:22 Short put vertical example
7:14 Greeks
8:27 Putting a trade
15:05 Handling short put verticals

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