Series 7 Exam Prep - Advanced Options. Spreads and Straddles. Lecture 4 FREE Class Replay

Lecture 1 Basic Options Class Replay    • SIE Exam Prep & Series 7 Exam Prep - Basic...   Lecture 2 Stock + Option Class Replay    • SIE Exam Prep & Series 7 Exam Prep - Long ...   Time Stamps: 00:00 Greetings and salutations 1:00 Review of previous classes and option strategies covered. 3:32 Naked call UNLIMITED RISK! Do a credit call spread instead! SPREADS 7:02 Spread Menu Eight Testable Items - Don't Hate the Eight CREDIT CALL SPREAD 9:02 Legging into a credit call spread LIMITED RISK! 12:00 Net the premiums to determine if credit or debit spread. 14:40 Credit, Expire, Narrow. 17:49 Maximum gain and maximum loss equals difference in the strike prices (15 points) 18:20 Maximum gain in a credit spread is the net credit (9 points). 18:50 Maximum loss in a credit spread is the difference in the strike prices less the net credit (6 points). 20:28 Breakeven in a spread is between the strike prices. 20:48 Breakeven CAL. Call Add to the Lower (150+9=159) 21:44 Bullish or bearish? Larger premium dominates. Larger premium is a short call so spread is bearish. CREDIT PUT SPREAD 27:52 Short put. Do a credit put spread instead! 30:42 Identify the spread 33:19 Credit spread of 11. Credit spread is more premium brought in than paid out. 34:03 Credit, Expire or Narrow. 37:07 Maximum gain and loss equals the difference in the strikes (15) 37:40 Maximum gain in a credit spread is the net credit (11) 37:45 Maximum loss in a credit spread is the difference in the strikes prices less the net credit (4) 38:55 Breakeven in a put spread (PuSH). Put subtract from the higher strike price (150-11=139) 41:02 Bullish or bearish. Larger premium dominates. Bullish because larger premium is a short put. DEBIT CALL SPREAD 45:38 Long call. A debit call spread instead. 46:11 Identify the spread. Long and short the same type of contract. 49:45 Net premiums to establish a debit or credit spread. 52:34 Debit, Exercise, Widen 54:00 Maximum loss and maximum gain equals difference in the strikes (15) 54:36 Maximum loss in a debit spread is the net debit (6). 56:00 Maximum gain in a debit spread is the difference in the strikes less the net debit (9) 58:40 Breakeven. C.A.L. Call Add to the Lower (150+6=156) 59:00 Bullish or bearish? Bullish because you are long the lower strike, or the larger premium dominates. The lower strike contract will always be dominant. DEBIT PUT SPREAD 1:05:50 Long put or a debit put spread instead. 1:10:05 Debit spread is more money out than in (debit of 7) 1:11:00 Debit, Exercise, Widen 1:13:00 Maximum gain and maximum loss equals difference in the strikes (30). 1:13:15 Maximum loss in a debit spread is the net debit (7) 1:13:30 Maximum gain in a debit dpread is difference in the strike minus the net debit (30-7=13). 1:14:36 Breakeven. PuSH. Put Subtract from the higher (150-7=143 BE) 1:15:00 Bullish or bearish. Larger premium dominates the spread. Higher strike put contracts always have greater premium. Debit put spreads are BEARISH. STRADDLES (COMBINATIONS are straddles with different strike prices) 1:18:11 Straddle Menu 1:19:00 Identifying a long straddle. 1:20:12 Calculating the breakevens. XP + total premiums = upside breakeven (150+9=159) XP - total premiums = downside breakeven (150-9=141) 1:22:34 Where is the straddle profitable? S.I.L.O. (Short Inside Long Outside). Long straddle want the market price of the stock outside of the breakevens. 1:23:30 When do you use a straddle? Long straddles are purchased when volatility is expected but direction is uncertain. 1:24:05 Short straddle 1:24:37 Calculate the breakevens. 1:24:58 Where is it profitable? 1:25:36 SHORT STRADDLES HAVE UNLIMITED RISK!!!!! 1:28:08 Long and short straddle summary 1:29:30 Straddle practice question 1:30:30 Two spread practice questions Last practice question the breakeven is 389 Lower strike 380 + net premium of 9