RED Option Vertical Spreads:

When speculating on a stock's direction, even the pros hedge their bets. That's why they trade vertical spreads. RED Option offers directional recommendations using long and short vertical spreads. Twice a month, RED Option's team of professional traders will choose a bullish or bearish trade for a stock or index based on their unique mix of experience with market trends, contrarian theory, option volatility levels and arbitrage opportunities.

This advisory makes recommendations using vertical call and put spreads that take market risk in individual stocks or indexes. Due to the inherently speculative nature of the advisory, it is important that clients recognize that it is not for the risk averse trader. But as experienced traders know, with greater risk comes the potential for greater rewards.

The advantage of using vertical spreads is defined-risk, tight markets for liquidity, risk-based reduction of buying power and good executions, as well as easy to understand breakeven points. Here's how it works: The RED Option Advisory team will make trade recommendations using long and short vertical option spreads for individual stocks or indexes. By definition, a vertical spread is buying one option and selling another option at a different strike price in the same expiration month. Bullish recommendations will use long call verticals or short put verticals, which is buying an option at a lower strike price and selling an option at a higher strike price. Bearish recommendations will use short call verticals or long put verticals, which is selling an option at a lower strike price and buying an option at a higher strike price.

In a variety of market conditions, from relatively low to high volatility, and from strongly trending to range-bound prices, verticals are extremely attractive as a low cost alternative to buying and selling individual options. These recommendations will provide clients with a way to take advantage of varying premium levels because the RED Option Vertical Advisory has the flexibility to be either long or short volatility. All the trade recommendations will have bullish or bearish bias but this platform is a simple way for option traders of all levels to learn and participate with the pros.

Example of an RED Option Vertical Spread: