We've talked about How To Trade A Vertical Spread, Call Debit Spreads, Put Debit Spreads and Put Credit Spreads. 

What I like about Debit Spreads is the reduced cost and they reduce the "break even."

For this example, I'm using tastyworks.

I use the PowerX Optimizer to find the best stocks to trade.

When trading there are 3 things you need to know:

1) What to trade

2) When to enter

3) When to exit

TGTX:

- Enter at 20.43

- Expecting stock to go as high as 25.37 (profit target)

- Stop-loss set at 18.61

The PowerX Optimizer told me: 

-Trade the 20 call w/ an expiration of 8/21.

- Spend no more than 2.10 when buying this option.

- Max Risk = $210 (you can't lose more than you pay for the call)

- Max Reward = Unlimited

- Breakeven = $22.41

Here's what I did:

- I sold the 25 call for 0.50

- My cost is now 2.10 - 0.50 = $1.60 ($160)

- Max Risk = $160

- Limited if the Stock reaches $25 or above.

- Breakeven = $21.60

- Reward Cap = if stock reaches $25 or above.

So by trading a spread here, we reduced our cost and breakeven.

Recommended Videos and Links:

Call Debit Spreads Explained: https://youtu.be/9tkZOnG2bAs

Put Credit Spreads Explained: https://youtu.be/8OKG9U9LAog

The Best Vertical Spread Option Strategy 2020: https://youtu.be/CcU40-TjdZM

Options Trading 101: https://youtu.be/tXpBZGj-FiA

My Trading Plan: https://mytradingroutine.com/