Stop Selling In the Money Spreads. Do This Instead.

Selling an in the money put spread and buying an out of the money call spread on the same strikes is the exact same trade. Same risk graph. Same max profit. Same max loss. But one of them has bid-ask spreads twice as wide as the other.Over a thousand occurrences that slippage adds up fast. Mike Butler shows this live on SPY with real open interest numbers and real bid-ask spreads side by side. The out of the money version wins every time on liquidity alone. Helpful links: tastylive: https://www.tastylive.com/ Get Tom's pre-market analysis every morning: tastylive.com/newsletters FREE Options Strategy Guide: https://tinyurl.com/bp9ms763 Follow tastylive on X: https://x.com/tastyliveshow CHAPTERS: 00:00 Out of the Money vs In the Money: The Key Difference 00:45 Buying OTM: More Percentage Gain, More Percentage Risk 01:25 Buying ITM: You Gain Intrinsic, But Lose Extrinsic 02:00 In the Money Put Spreads: The Hidden Problem 02:45 Same Strikes on the OTM Call Spread: Look at the Markets 03:36 Open Interest: 20K OTM vs 1.9K ITM 04:51 Bid-Ask Spread Cut in Half on the OTM Side 05:08 The Rule: Always Use the OTM Counterpart 06:00 One Exception: Synthetic Covered Call Using an ITM Put #optionsinaction #optionstrading #optionsforbeginners #howtotradeoptions #putspread #callspread #optionsstrategy #spyoptions #optionsexplained #tastylive tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we’ll help you take your trading to the next level, whether you are new to trading or a seasoned veteran. tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange Traded Options Risk Disclosure Statement found at https://tastytrade.com/disclosures/. Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.