---
date: '2025-10-27'
description: fractional, vertical bull/bear spreads
id: options
modified: 2026-06-05 15:08:38 GMT-04:00
tags:
  - commerce3fi3
title: options market
created: '2025-10-27'
published: '2025-10-27'
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slug: thoughts/university/twenty-five-twenty-six/commerce-3fi3/options
permalink: https://aarnphm.xyz/thoughts/university/twenty-five-twenty-six/commerce-3fi3/options.md
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---
## trading derivatives

- leverage to hold a large position

## vertical spreads

> vertical spread involves “the simultaneous purchase and sale of two options of the same type with same the expiration date but different strike prices.”

- can be done on indices
- bull vs bear call/put

### call bull spread

> bullish on the direction of the underlying security
>
> - profit if price of underlying rises, delta is positive
> - one option for profit, the other ne for cost strategy
> - compared to stock ownership, has limited profit potential and limited risk
> - spread, debit transaction, cash outflow, expire _in-the-money_
> - max profit is difference between strikes minus the initial premium paid for the spread.

### put bull spread

> higher put commands more money <span>&rarr;</span> give you command to sell at higher price.

_credit spread_

> \[!note\] for area under the curve
>
> 1-to-1, area under the curve.

Quiz 2: Lectures 4,5,6