How To Trade Option Debit Spreads On tastyworks

How To Trade Option Debit Spreads On tastyworks
To get the transcript and MP3, go to: www.rockwelltrading.com/coffe...
Quick Recap: 0:00
TGTX Example Buying Call: 0:59
TGTX Example Debit Spread: 5:02
We've talked about how to trade a vertical spread in another video (link down below). Call Debit Spreads, Put Debit Spreads, and Put Credit Spreads.
What I like about Debit Spreads is the reduced cost and they reduce the "break even."
For this example, I'm using tastyworks.
I use the PowerX Optimizer to find the best stocks to trade.
When trading there are 3 things you need to know:
1) What to trade
2) When to enter
3) When to exit
TGTX:
- Enter at 20.43
- Expecting stock to go as high as 25.37 (profit target)
- Stop-loss set at 18.61
The PowerX Optimizer told me:
-Trade the 20 call w/ an expiration of 8/21.
- Spend no more than 2.10 when buying this option.
- Max Risk = $210 (you can't lose more than you pay for the call)
- Max Reward = Unlimited
- Breakeven = $22.41
Here's what I did:
- I sold the 25 call for 0.50
- My cost is now 2.10 - 0.50 = $1.60 ($160)
- Max Risk = $160
- Limited if the Stock reaches $25 or above.
- Breakeven = $21.60
- Reward Cap = if stock reaches $25 or above.
So by trading a spread here, we reduced our cost and breakeven.
Recommended Videos and Links:
Call Debit Spreads Explained: • Call Debit Spreads Exp...
Put Credit Spreads Explained: • Put Credit Spreads Exp...
The Best Vertical Spread Option Strategy 2020: • The Best Vertical Spre...
Options Trading 101: • Options Trading 101 - ...
My Trading Plan: mytradingroutine.com/
#StockMarket #DebitSpread #TradingOptions
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[@rockwelltradingservices]

I hope you found this video helpful, and if you have any questions about debit spreads, let me know in the comments.
Recommended Videos and Links:
Call Debit Spreads Explained: th-cam.com/video/9tkZOnG2bAs/w-d-xo.html
Put Credit Spreads Explained: th-cam.com/video/8OKG9U9LAog/w-d-xo.html
The Best Vertical Spread Option Strategy 2020: th-cam.com/video/CcU40-TjdZM/w-d-xo.html
Options Trading 101: th-cam.com/video/tXpBZGj-FiA/w-d-xo.html
My Trading Plan: mytradingroutine.com/

[@hansguth]

I was initially confused because I saw the video post date was March 8th 2021 but the price of TGTX was far above the $20 price range at that time but it looks like the video was actually shot back in 2020.

[@rockwelltradingservices]

This is more of a "How to" video than a stock update. For daily stock update we do it live every morning.

[@farismech]

Markus , good explanation. I just wondering why my P/L day (in Debit spread) not same as analysis tab . I'm very confusing. It is not reflected with analysis tab. Example analysis tab show P/L $252 but in position P/L open just $50. Which one is genuine

[@edgarambart23]

Hey Markus, what video software do you use to show the chart and your selfie video

[@rockwelltradingservices]

It's the Power X Optimizer. 😊

[@randygarnett7325]

How so you normally get out of these spreads?

[@rockwelltradingservices]

You just close them by doing the opposite: If you BOUGHT before, you would now SELL (to close). Making sense?

[@froggy9068]

No I don't understand

[@rockwelltradingservices]

If you are a beginner please go to my playlist here th-cam.com/video/eh6ZxuFp7-g/w-d-xo.html