Put Bull Spreads
Chapters in this video
- 0:00 Why puts can be bullish: Trey gets paid up front
- 1:12 Textbook definition and the credit build
- 2:30 The yellow convertible analogy and spread-to-narrow mechanics
- 3:35 NFA "spread to narrow" and the worthless expiration path
- 4:02 Step-by-step arithmetic: strike difference, max profit, max loss
- 5:08 Breakeven formula and the max profit plus max loss check
- 5:56 Exam trap one: credit spreads need narrowing, not widening
- 6:28 Exam trap two: position direction beats option type
- 6:47 Call bull spread versus put bull spread: the bullish twin comparison
- 7:13 Rapid-fire exam recap
What this video covers
- The exact build of a put bull spread: sell the higher-strike put, buy the lower-strike put, same expiration, for a net credit
- Why selling a put is fundamentally bullish, and how this spread collects premium up front to express a bullish or neutral-to-up view
- The National Futures Association (NFA) annotation "spread to narrow," and why the profit mechanism is gap collapse toward zero
- Maximum profit (net credit received), maximum loss (strike difference minus net credit), and breakeven (higher strike minus net credit)
- The instant math check: max profit plus max loss must equal strike difference
- The fatal trap of credit-versus-debit logic, and why "profits as the spread widens" is always wrong for this position
- The pairing with the call bull spread: both are bullish, one is credit (puts) and one is debit (calls)
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