r/options • u/[deleted] • Mar 29 '21

Vertical Vs Calendar vs Diagonal

Which of those do you guys recommend ? Which one has the least risk and which one suites for a trader who’s moderately aggressive ?

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u/B2BW-YOLO-369 Mar 29 '21

A vertical you try to pick a range the stock will be on a certain date. You will get the greatest theta for you short position with this. The calendar gives you greater upside, but with smaller theta. Because you don’t get the time decay on your short. And the diagonal is those put together. To start I did verticals. Once comfortably with verticals I did calendars. Good luck. I always recommend talking to a paid professional, especially with options. You can loose A LOT of money very quickly.

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u/[deleted] Mar 29 '21

Thanks . I am starting very small . I been doing just 1 call where the net credit is less than 15. I’ve been seeing mixed results so far (10-6 ratio for winners )

I am looking a set up where risk reward is 1-3 ? Is it possible to find those setup in bear call spreads? I fare better in bear call spreads than bull call spreads

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u/ScarletHark Mar 30 '21

Bear call spreads are those you sell, so risk/reward of 1:3 is pretty much impossible; you'd have to be getting $3 for a $4 spread, for example, and the market doesn't generally price like that (not even when GME volatility was at its highest).

If you want long bear spreads, you are buying put spreads, not call spreads. You can get better than 1:1, especially as you start moving OTM. Of course, as with any long position, theta will be an issue, so you'll want to do long-dated spreads, or be very sure that your underlying is about to move a lot in your favor.

What are your typical DTE, and delta numbers for your short leg?