Intermediate
Spreads as vocabulary
Multi-leg structures as words: debit/credit spreads — not recipes. Education only — not a recommendation to buy, sell, or hold anything.
Why people combine legs
Spreads mix long and short options to shape payoff, cost, and risk. Naming the structure matters more than memorizing “best” trades.
Vertical spread (idea)
- Same expiration, different strikes.
- Debit spread — you pay net premium.
- Credit spread — you receive net premium (with defined or capped risk depending on design).
Defined vs undefined (concept)
Some structures cap max loss; others (like naked short calls) can be severe. Always ask: what’s the worst case on paper?
Lab stance
Learn the names. Practice only with fake money. No structure is “safe” by nickname.
Practice tip: Keep legs conceptual on /mock/options/ — fake premiums only.