When you read through options education books, very few actually recommend starting with learning spreads. Most of the time you’ll be directed toward selling covered calls or cash secured puts.
However, once you dig just a bit further into options trading you quickly learn spreads are the building blocks to many of the more advanced trading strategies.
Though I was familiar with spreads and how they worked, I felt the need to dig a bit deeper to gain a full understanding of how to trade them. Having recently completed Hari Swaminathan’s Option Trading Basics course (read the review here) I decided to allow him to once again lead me on my educational journey.
So, with little hesitation I bought the course on Udemy, see my receipt below:
And quickly completed the comparatively short course:
Spreads – The magical building block to more advanced strategies
Before we jump into Hari’s course, let’s talk quickly about spreads. Spreads are like water or air when it comes to trading options…they’re nearly indispensable for growing beyond the basics of covered calls and selling puts.
When you start digging deeper into the jungle of option trading strategies you find things like Iron Condor, Iron Fly, Jade Lizard…it kinda starts to sound like the new movie Fantastic Beasts and Where to Find Them.
But when you look into the setup for these strategies (and many others) you quickly learn spreads are fundamental to executing these advanced trades. So what is a spread then?
A spread is a position consisting of two legs, both calls and puts. These spreads can be traded for a credit or debit to your account and can give you a bullish, bearish or neutral position depending on how you setup the trade. I won’t go into all the details about spreads, but suffice to say understanding how they work will make you a better trader.
Fortunately, this Hari’s course doesn’t throw you into the deep end without a little bit of support. Hari spends the first half of his course going through the basics of spreads which we’ll cover next.
Let’s assume you know nothing about spreads…
As with Hari’s course on Options Trading Basics the beginning of the course is a deep dive into the fundamentals of spreads. For the experienced traders out there, this is probably a bit of a refresher on the topic. However, for you beginners (myself included) it’s a lot of necessary detail to understand how the various types of spreads work in the market.
Hari goes into the details on the four types of spreads, credit or debit call spreads and credit or debit put spreads. What he explains can be found in many of the books on spreads, but what I like most about this particular part of the course is the visual aspect you get from running through the ThinkorSwim platform with Hari.
He walks you through how the use of spreads reduces the effect on your buying power, how theta affects each spread and some of the other components of spreads. Though it can seem to drag a bit at times (i’d recommend watching on 1.5x speed), I felt confident I understood spreads after completing this portion of the course.
As if the foundational videos weren’t enough, Hari continues your education in spread basics with example trades on IBM, Amazon, Netflix and Google applying one of the four types of spreads to each stock.
Within each fictitious trade (he’s using a paper trade account) he walks you through the trade rationale, trade management or adjustments and trade exit. I’d personally prefer to see an actual trade, however it seems Hari handles the trades as if they were real, applying his entry, management and exit philosophy to each trade.
Along the way, if you pay close attention to Hari’s option selection you can pick up bits and pieces of Hari’s actual strategy for trading spreads. Fortunately, you’re not left to figure this out on your own as the next section of the course delves into his spread trading strategy for monthly income.
Getting into the weeds on spreads
In the section Hari calls Advanced Credit Spread Surgery you finally get to find out the details of Hari’s monthly income spread trading strategy.
I’ll say from the onset, after digging through many course, books and free online resources I will say Hari’s strategy is similar but not the same as many other traders’ recommendations.
I think what sets Hari apart from the other resources out there is the level of specificity in his recommendations. He doesn’t quite hand you a checklist for trade entry/exit, but you could build one yourself from the information provided.
I won’t provide an exhaustive list of the factors Hari accounts for but he incorporates a discussion on delta, expiration, type of spread, strike selection and if you pay close attention some technical analysis for trade entry. I wish he went into a little more detail on this as by my figuring he only spends just over two minutes on it, but its specificity is worth noting.
Topping off this portion of the course is another set of trade examples, this time using LinkedIn and Netflix. Like the previous examples, Hari walks through entry, management and exit for each of the trades in detail, explaining his reasoning along the way.
I’m not sure there’s much more Hari could’ve added to this section to give you any additional information on spreads. I would’ve liked to see and hear more about his technical analysis application, however that deficiency doesn’t significantly impact the value of this half of the course.
In closing, Hari sums up his strategy in a fairly succinct manner recapping the highlights of his strategy as a last minute refresher leaving you, I think, a satisfied student.
What you really want to know…should you buy the course?
Should you buy the course?
I’d definitely recommend this course for beginners. The education on spread basics coupled with the particulars of Hari’s strategy makes for a successful pairing on this topic. And at the low price of $10 I think this is a no brainer for any beginner.
I’d say this is a solid maybe for intermediate and advanced traders who don’t have a specific strategy around trading spreads. If you’re just slinging trades like Clint Eastwood in an old Western, then yeah I purchase the course just for the second half of it. However if you’ve got a solid strategy which works for you then I’d save the $10 to pay the commissions on your next trade.
Overall, I can’t argue with the quality of the course for the nominal $10 cost. I continue to enjoy the level of detail in Hari’s courses and i’ll probably purchase one again in the future when I decide to add another strategy to my trading toolbelt.
I hope you enjoyed this course review and as always I’m interested in hearing what you have to say. If you’ve taken one of Hari’s courses leave me a comment on what you thought about it…was it worth it?
Also if there are particular courses you’d like to see a review on, either leave me a comment or send me an email at firstname.lastname@example.org and I’ll try my best to get to it!