Vertical Credit Spread Options Trading System
Your membership to Crestrade will include alerts from the Vertical Credit Spread Trading System:
|Vertical Credit Spread Options Trading System Specifications|
|Perfect for:||Traders looking to profit from time-decay of option premiums with limited-risk.|
|Trading Style:||Options Trading|
|Average Hold Time:||2-6 weeks, most through expiration|
|Trade Frequency:||2-4/month, max of 4 simultaneous open positions|
|Focus List:||Any stock or index that is not likely to breakout in new trend direction|
|Strategy Objective:||Current Stock Price at Max-Profit point|
|Profit Goal*:||30%-125%+ profit per trade trade based on amount risked (buying power used)|
|Risk Control:||Defined Risk Approach limits loss to buying power used|
|Alerts Used:||Entry and Exit Signals through a Trade Alert Email, Live Trading Room and Trade Forum (demo)|
|Delivery Method:||All can be delivered to Computer, Smart Phone and Tablet via instant messanger and emails|
* Note that 100% of amount risked could be lost on options spreads, and that profits are NOT guaranteed on ANY trade. Please allocate funds responsibly.
What is a Vertical Credit Spread?
Vertical Credit Spread Defined: An options trading strategy which includes the sale of a closer-to-the-money option (higher-priced) with the purchase of a further out-of-the-money option (lower-priced) with the same expiration date on a one-to-one basis.
What it means: When you enter a Vertical Credit Spread, you are selling a call and buying a call (Bear credit spread) or selling a put and buying a put (Bull credit spread). You profit when the stock either does not move at all, or moves in the correct predicted direction. This options trading strategy is a perfect "limited risk/limited return" technique for traders looking to take advantage of strong support or resistance points on the underlying stock and overpriced option premiums.
EXAMPLE: Take a look at what the order looks like on a Vertical Credit Spread on the stock SPY where we buy 1 put option with a strike of 122 and sell 1 put option with a strike of 123. The result is a complete trade that gives us a 0.40/contract ($40) CREDIT to our account (for each contract we choose to do).
The price of SPY at the time of this trade was 123.83.
EXAMPLE: Now look at the profit and loss scenarios that could occur on the trade we entered above. First, notice that at the time of entry, SPY was already well into the max profit range at 123.83. If SPY stays above 123, we'll achieve maximum profit of $40 per contract. Our breakeven point is 122.60 and we have max loss of $60 per contract if SPY is under 122 on expiration day.
Deliver Income to your Portfolio
Vertical Credit Spreads are designed to be "income-producing" trades in your portfolio: When our experts send for Vertical Credit Spread trades, we are looking for stocks that we believe will either move in a specific direction or not move at all. The result is a trade with increasing profit every day that the stock does not move (or moves in the specific direction predicted).
Our options trading methodology gives you the best Vertical Credit Spread trades with all of the following:
- Stock Currently at "Max Profit" Point -- We want a trade that makes money for us every day from now through expiration. We do not want the stock or index to HAVE to move at all to accomplish our maximum profit potential. In fact, most of our Vertical Credit Spread trades will experience a profit even if the stock moves against you by 1.5-2.5%!
- Quick Profit Potential on "near-expiration" options -- You will start to see the time-decay profitability kick in quickly after a position is established because all trades will be on options that are within 60 days of expiration.
- LOW max loss -- Options trading is about understanding and controlling risk on losing trades while successfully maximizing profits gained from winning trades. Each Vertical Credit Spread trade will have a small effect on your overall buying power. In fact, you will be able to trade each of our alerts with as little as $250 of buying power used!
Real-Time Alerts tell you EXACTLY when to get in AND get out!
You will always know exactly where we stand on every trade, every day. We will send you real-time entry AND exit trade alerts via email and our Live Trading Room (Click here for demo) along with our online trade forum to keep you fully up to date on every position. Each alert and update comes complete with an expectations and analysis movie (view demo) that includes entry price limits, stop loss levels and profit targets to insure that you always know exactly what is going on with every open position in your account!
Options Trading Designed to fit YOUR Schedule
Trade Alerts are sent with the idea that the trade can be made anytime within the next 24 hours. In other words, you will NOT need to be at your computer all day in order to enjoy the full benefits of our Options Trading System!
Vertical Credit Spreads are a limited-risk, limited-reward strategy that go for consistent profits over time. The Vertical Credit Spread Trading System is a part of the Crestrade Options Trading System.