Why make this trade a spread?

[Money Morning LIVE] Sunday, June 19, 2022 [The Best $5 You Could Spend Today]( It's no secret that the market is in turmoil. But what if you could weather this bearish storm [starting with just $5?]( Tom Gentile is unlocking his money calendar of scheduled paydays. He'll help you find trades with a proven history of success no matter the market... and for a limited time, you can take a month-long test drive for just $5. [Click here to learn more.]( --------------------------------------------------------------- Why make this trade a spread? Hey, Money Morning LIVE family, Last week Mark Sebastian recommended an option trade on Chevron (CVX)... Trading Alert: Buy-to-Open CVX July 15, 2022 $170 Calls for $6.00 or better | Sell the $185 Calls for $1.50 or better to turn it into a spread You may often see this in the chat room with our traders where we recommend an option and then add a second option to sell to make the trade a spread. Why? It's all about lowering your upfront cost, or just another strategy in risk management. It is almost always a choice on the trader's part whether to keep a straight call or put trade, or to add a second contract to offset the cost. How? Well, in the case of Mark's CVX trade, those $170 call options were $6 per contract, which is pretty pricey for one call option. That is one reason why Mark recommended selling the out-of-the-money $185 calls to make this trade a bull call spread. With a bull call spread like this, selling to open the $185 calls lowers the upfront cost of buying the $170 calls... so why don't we always do that? Well, by selling those $185, you're also limiting your upside by selling those calls, because if CVX moves to the $185 level, you're giving up any more profits from the calls you purchased. We have a video here where I discuss the differences between [straight options]( and spreads... [Straight options vs spreads]( At the end of the day, this is all about defining your own risk/reward preferences for a trade. That's why we give you multiple options each day in the free trading room. Alright, traders, please remember the markets are CLOSED tomorrow, but Money Morning LIVE will be back on Tuesday, and we'll have a [full day of streaming]( lined up for you. Have a good weekend. Garrett {NAME} Executive Producer, Money Morning LIVE P.S. - Mark Sebastian is an industry leader in [options trading]( and he's teaching options strategy every day in his [Profit Revolution room](. If you want to learn more about his options strategy and how to get started, we have the [details right here](. 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