Retail investor: I trade credit spreads. Love the defined risk.


Me: Walk me through one. What are the two legs?
Retail investor: I sell a call & buy a call further out. Standard call credit spread.
Me: So you sold a call... that's a bearish bet. & bought a call... that's a bullish bet. Same stock. Same time.
Retail investor: ...huh. I never thought of it as both.
Me: You're bullish & bearish on one company in one trade. You're literally betting against yourself.
Retail investor: So which side am I even on?
Me: Neither, really. Pick one. When I'm bullish I sell portfolio secured puts & buy long duration calls. No betting both ways...
Don't place a bullish & a bearish bet on the same stock & call it a strategy...
A spread is you arguing with yourself...
Pick a side. Commit. Let the winners actually run.
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