Spread Summary Table
Chapters in this video
- 0:00 Debit vs credit spreads as insurance policies
- 2:21 Net cash flow decides debit or credit
- 2:52 CAL and PUSH breakeven shortcuts
- 3:43 Worked examples: bull call and bear put breakevens
- 4:15 The four-spread mega matrix for max gain and max loss
- 5:02 Sam's error check: max gain plus max loss equals spread width
- 6:13 Rapid-fire exam recap
What this video covers
- How to tell a debit spread from a credit spread by looking only at the net cash flow, and why the higher-premium option dictates direction
- Why time decay helps credit spreads and hurts debit spreads, framed through the buying-insurance vs selling-insurance analogy
- The CAL rule (Call, Add, Lower) for any call-spread breakeven, regardless of debit or credit
- The PUSH rule (Put, sUbtract, Higher) for any put-spread breakeven, regardless of debit or credit
- Max gain and max loss formulas for all four vertical spreads in one side-by-side matrix
- The supervisor's golden error check: max gain plus max loss must equal the spread width (the difference between the two strikes)
- How to spot the classic exam trap where a wrong calculation is deliberately offered as a multiple-choice distractor
Read the full lesson, free
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