How Options AI does Spreads
Spreads Visualized: You don't need to be fluent in Greek to enjoy spreads on Options AI
At Options AI, we see multi-leg options not as a bunch of numbers and old-fashioned pay-out diagrams, but as clear and simple zones of profit and loss on a chart. Zones that can be easily modified to find the right mix of risk, reward and probability of profit.
Not only does this help take the legwork out of more advanced trading, we think it also helps highlight how Spreads can sometimes be a smarter strategy than outright Calls or Puts.
Let's first compare buying a Call to buying a Debit (Bull) Call Spread.
Below, we compare buying a Call to a Debit Call Spread, using TSLA as an example.
In both examples we buy a TSLA 285 Call, but with the Debit Call Spread we simultaneously sell a higher strike, 313 Call. The sale of this Call introduces a (light green) zone where profits are capped versus the outright Call where the (dark green) zone of increasing profits is uncapped. However, by accepting capped profits, we see that the Call Spread has allowed us to reduce our breakeven level and lower our cost (Max Risk), thereby also improving our Probability of Profit.