Spreads vs. Naked Options – What Professional Traders Know

The Automated Trading Podcast by Advanced AutoTrades

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This episode explores Spreads vs. Naked Options in the context of the inherent difficulties in accurately predicting the direction, magnitude, and speed. The hosts argue that buying or selling individual calls or puts is akin to gambling, exposing traders to excessive and undefined risk, particularly with naked options. Option spreads, such as bull call spreads and credit spreads, are presented as strategic alternatives that define risk, lower costs, and offer a higher probability of success by reducing the need for precise market timing and large price movements. The hosts emphasise that spreads allow traders to manage the three dimensions of options trading effectively and can even profit from time decay, unlike single long options. This trading philosophy centres on defined-risk strategies to achieve consistent returns, highlighting their own success using option spreads and advising against the risky practice of selling naked options.

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The content on this channel is for educational purposes only. Advanced Autotrades IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Neither Advanced AutoTrades nor any of its owners or employees is registered as a securities broker-dealer, broker, investment advisor (IA), or IA representative with the U.S. Securities and Exchange Commission or any state securities regulatory.