Name: Front Spread w/ Calls
Setup: Buy (long) Strike A call and Sell (short) 2 Strike B calls
Bias: Neutral to Slightly Bullish
Break-Even: Strike B + Max Profit
Max Profit: Limited: Strike B – Strike A + Credit Received
Max Loss: Unlimited if the underlying climbs
Margin: Margin equals the requirement for the short call
Time Decay: Time decay is a positive effect. As time goes on it will lower the value of your long call but also lower the value of your short calls which outweigh the long
Implied Volatility: After the play is put on you want volatility to decrease as it will have a greater positive effect on the short calls
Notes: None at this time
Featured in Trade Review: None at this time
Welcome to Swing Trading the Stock Market Podcast!
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Commit these three rules to memory and to your trading:
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In today's episode, I talk about tightening the risk on the trades and the benefits of taking a multi-pronged approach in doing so between profit taking and raising the stops. Also, I cover how how aggressive one should be in adding new swing trading positions and how many open positions that one should have at any given time.
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