Thinking In Options with Bill Johnson

Legging Into Vertical Spreads: The Risk of One More Choice


Listen Later

Last week, we explored why LEAPS give you more time—but not more opportunity. This week, we take that idea deeper by uncovering a subtle but critical risk that many options traders overlook: legging into vertical spreads.

On paper, vertical spreads are "defined risk" trades. But in practice, the way you execute the trade can quietly introduce a completely different kind of risk—one that has nothing to do with market direction and everything to do with structure and decision-making.

Using a surprisingly powerful broomstick analogy, this episode breaks down:

  • Why entering a spread as a single order preserves stability
  • How legging into a trade increases the number of possible outcomes
  • The mathematical reason more choices = more risk
  • What "execution risk" really is (and why it's so expensive)
  • Why professional traders focus on differences, not individual legs

You'll learn how splitting a spread into separate orders transforms a flexible, stable trade into a fragile, path-dependent one—where the market must cooperate twice instead of once.

This isn't about bad fills or market makers—it's about geometry, probability, and the hidden cost of adding just one more choice.

If you've ever tried to "improve your fill" by legging into a spread, this episode will completely change how you think about execution, risk, and control.

...more
View all episodesView all episodes
Download on the App Store

Thinking In Options with Bill JohnsonBy Bill Johnson