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During the life of a vertical call spread, the spread will trade between its minimum and maximum values (between 0 and the difference between the two strikes). In the case of a vertical call spread, the spread will trade closer to zero when the stock trades closer to or lower than the lower strike price.…click to read more.

We have demonstrated that vertical spreads have intrinsic value, and that we can roughly determine their value by comparing stock price to strike prices. There is another relationship that can help investors determine value. That is the relationship that exists between corresponding vertical spreads. When we use the term corresponding we mean the same month,…click to read more.

Any spread that has intrinsic value is considered in-the-money. How can you identify the value of a vertical call spread or a vertical put spread? Compare the stock price to the strike prices. Look at any vertical call spread. If the stock price is above the lower strike of the spread, then the spread is…click to read more.

In looking at vertical spreads, an investor must take note of the fact that vertical spreads have an intrinsic value. This means that a vertical spread can be considered to be “in-the-money”. If a vertical spread has an intrinsic value then it can also have an extrinsic value. The maximum extrinsic value in a spread…click to read more.

It appears as if the Federal Open Markets Committee will once again play Superman to the Lois Lane that is the US equities markets. The scary/recessionary macro economic reports and subsequent announcements by Fed chairman Bernanke and his second in command last week appeared to have erased all doubts of the expected December 11 rate…click to read more.

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