Boss: The spread trader

What you get asked

1. Boss round: you buy the €80 call for €6 and sell the €90 call for €2, same expiry. What is your maximum profit per share, in €?

   Width €10, debit €4, so max profit = €10 − €4 = €6, reached at or above €90 at expiry. Max loss is the €4 debit. Both are known before you clicked.

2. Why does a credit-spread seller pay for a long leg instead of selling naked?

   The long leg converts 'theoretically ruinous' into a fixed number you can run the 1% rule on. Defined risk is what turns premium selling into a sizeable, repeatable business.

3. Match each League 2 structure to its one-line identity

   Four tools, one theme: every structure in this league has its cost, cap, and worst case known at entry, and no structure escapes paying for what it receives.

4. A newsletter sells a covered-call system as 'rental income with no downside.' Which League 2 truth debunks it?

   You keep nearly all the crash risk and sell away the melt-up. The yield is real and so are the costs; anyone hiding the second half is selling a story, not a strategy.

5. Many premium sellers close winners at ___ of max profit to dodge late gamma risk.

   The first half of the credit comes fast; the last cents come slowly while one sharp move can still flip the trade. Bank it, redeploy, repeat.

6. Final boss question: what single habit most separates surviving spread traders from blown-up ones?

   Strike-picking is a dial, adjustments are new trades, and high IV cuts both ways. But the trader who caps what one bad week can take always gets to trade the next one. League 2 cleared. 🐜

The rest of this unit

Rolls, profit rules, assignment surprises: running a spread book like a professional.

• Rolling
• The 50% rule
• Assignment & expiration
• The income trader's discipline