Worksheet: STEP BY STEP TO OPEN A BULL CALL VERTICAL DEBIT SPREAD
Fill out this Worksheet from the following information on Starbucks
Example: BULL CALL DEBIT SPREAD
Starbucks has opened upscale coffee cafes, “Reserve Café”.
You believe Starbucks stock will go up and want to
place an order for a Bull Call Spread option.
1. Open TDAmeritrade account to do your research.
2. Insert SBUX in “search”(upper right corner)
3. Fill-in-the-blanks on Bull Call Strategy Template.
4. The price of Starbucks is $90.09
5. Open SBUX Option Chain in TDAmeritrade.
6. Select Expiration Date at 40 – 120 days away, and
with the largest Open Interest ( April 17, 2020)
7. Select Bid/Sell CALL option column
A. In-the-Money
B. BID/SELL strike price @ ONE notch BELOW
stock price of $90.09 = $90.00 (premium of $3.20)
8. Select Ask/Buy CALL option column
A. In-the-money.
B. ASK/BUY strike price @ ONE notch BELOW $90.00
strike price = $87.50 (Premium of $4.80)
9. How much premium do you have to pay?
($4.80 less $3.20 = $1.60 X 100 shares = $160.00)
10. Summary:
1. You are Buying(Ask) a Call @ $4.80 Ask premium price
2. “Financing” it by Selling (Bid) of $3.20 Bid premium price
3. PLUS paying $1.60 of your own money upfront (a Debit premium)
You are ready to open your TastyWorks account on your
Desktop and place the Starbucks
Vertical Debit Spread Order.
http://www.TastyWorks.com
#1. Open TastyWorks Desktop trading platform.
#2. Insert SBUX stock symbol – ENTER!
#3. Click on “Strategies” (drop down menu)
A. Select “Long”
B. Select “Call” – GO!
C. Select “Vertical” = “Long Call Vertical”
#4. Click on “Curve”
#5. Click on “Expirations” plus or minus key
to find expiration date option chain you want.
#6. “Order” On the lower left is a summary
A. Insert number of contracts
(remember: one contract is 100 shares)
B. Let’s order 1 SBUX contracts.
#7.Summary:
Buy/open – 1 – April 17 – 64d – 87.50 C – 4.80
Sell/Bid – 1 – April 17 – 64d – 90.00 C – 4.20
#8. Lower, middle, is Premium (the amount you have to pay)
This amount will be a MID price premium of $1.50
(computer program calculation – your calculation is $1.60)
I usually accept the MID price.
#9. Click “Review and Send”
#10 Order “type” will be : “Net Debit $1.50
#11 “TIF” – Time In Force: always select “DAY”.
#12. BEFORE “SEND” ! Print out information shown in
“Review and Send” !
(Info will disappear when you click Send)
13. If everything looks okay: SEND
14. You have a “Working Order” (W), pending the Opening Bell
next day of the Options Market.
15. If order goes through, it will have a “Filled” (F) notation
Confirmation of “Filled” order:
A. Open TastyWorks/Home
B. My Account — Transactions –Print.
HOORAY ! YOU DID IT !!
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