what's going on everybody welcome back to my channel in today's video I am going to show you guys how to open and close credit spreads on Robin Hood okay this question comes up a lot from a lot of uh new traders that are just getting into options trading so I thought I'd make a little educational video uh for you guys showing you showing yall exactly how to do this on Robin Hood okay so we're going to use Amazon as an example nothing this video is financial advice it's all for informational purposes only so do not copy any of these trades these are just examples okay and most likely I'm going to either make a profit or take a loss on these trades right now because I haven't researched Amazon for today's trading right now and I'm using this just as an example so I don't feel either way about Amazon I just want to show you guys some executed trades so you know you you you learn so yeah I'm going to take the cost of a loss in case if it happens just to be able to teach you guys so please take a moment and click that like button okay I'd love it if we could just get 500 likes on this as soon as possible okay now let's do this um so Amazon so say for instance you are bullish on Amazon you think Amazon's going to go up and this is where the credit spreads can get just a little confusing okay so uh make sure you watch till the end because I'm going to show you guys call Credit spreads and put credit spreads okay uh and how to open and close them I'm going to go through the entire process so say you're going to go into trade uh the trade uh options and here's here's how it's going to go down usually when you're bullish on a stock you buy the calls you buy calls because you're expecting prices to go up but that's when you're paying money out okay that's when you're actually doing a debit when you're getting a credit when you're getting paid premium is the opposite you're going to sell a put so it's a it's a bullish uh put spread okay so you're expecting the prices to go up and you want the value of the puts to go down that's why you're getting a credit for it so that's that's where it gets a little confusing so make make notes write this down okay When You're Expecting the stock to go up and you want to collect credit when you want to do a credit spread you're going to sell a put spread okay um and then it's the opposite if you're expecting it to go down instead of purchasing puts you're going to sell calls so you're going to sell a call spread so even though it's call it's a bearish call spread okay so for instance you're You're Expecting Amazon to go up in this example so we're going to click on put the price right now is at 152 right 15293 um so what we're going to do is I'm going to go ahead and I will sell click on sell put sell because I'm expecting it to go up to 125 and then I want to limit my exposure because the max could be ridiculous the max loss would be ridiculous right Max profit is only 125 but the max loss is $115,000 we don't want that so to offset that and to create the spread I'm going to go ahead and buy the next level down which is the 150 and we're going to buy that for 48 cents so 48 so now now we've limited our downside risk now the stock could stay where it is it could go up it could fluctuate a little bit it could even go down a little bit right and would still make some money on this but if it goes up great and by expiration date our Max profit would be one would be 76 our Max loss would be 174 okay so that's how you do a bullish put spread which is a credit spread so even though it says put you're selling that's why but you're collecting a credit right up front so that that's a concept you have to get your mind mind around is you know the terminology it feels the opposite when you're collecting credit when you're you're getting premium it's the opposite okay so for instance let's go ahead and do this and you're going to click continue we're just going to do one for the example Le and we're selling this so we're going to collect the least amount of Premium so I'm just going to Max it I'm just going to do I'm just going to go for the bid price because we're we're selling a put spread right so let's see if it gets executed at this price it should and if it doesn't there we go come on come on come on come on the mark is about to close soon so we want to make sure that this gets executed so I can get out of it too before the market closes all right well let's just change it to even a lower price so make sure that it does execute so you guys see the example 73 so we're just going to collect $73 in credit there you go executed right and then once once that's done and you want to get out of the trade you're like okay so I sold 152 I bought the 1 150s protection right so when you want to close it you're going to buy back the 152 and you're going to sell the 150 but instead of doing that as a different trans instead of doing that as a separate transaction and doing both of these legs the cool thing about Robin Hood is you can come back into your your debit spread I mean your credit spread right this is this is what we did you can just click on close it'll it'll execute both legs for you at the same time so now we're going to do we're going to get out of this trade and the way we're going to do that is we're going to just we just did one contract as the example let's make sure we were're going to buy it back we're going to buy it back at the 179 price and it keeps going up so it's going to keep costing me more but it's fine oh the cost of Education I get to teach you guys you know that's great um all right so I'm going to review this I'm just going to and boom hopefully should yep it executed and we're out of that trade simple right and now let's let's see what we need to do if we feel the opposite side if we feel Amazon's going to go down right if Amazon's going to go down instead of instead of shorting the stock or whatever it is another option would be to buy it by put options right but if you're not too sure you want some some leeway right there you would sell a bearish call Credit spread okay terminology again right so let's go out let's go out 31 days and say I want to I feel like it's going to go down so now I'm going to sell so click on sell your call it's going to go down so I want this value to go down right because I want to keep that premium I want to collect that juicy premium so I'm going to sell this call but now if Amazon just takes off my Max loss is unlimited okay unlimited you never want to be in that situation so what you're going to do is you're going to create a spread out of this so now I will buy the 160 okay so now my it protects me because now my Max loss would only be 297 where my Max profit can be 203 okay if I'm expecting it to go down right because when it goes down I make money when it goes up up until this break until this point okay I'm not going to take a Max loss okay uh so that's the beauty of selling these credit spreads right because you're collecting premium times on your times on your side because the options keep losing value as time goes on because of theta right because of time Decay so this works out pretty well so let's go ahead and do this let's go ahead and get our credits or Max loss Max profit we already know what those are click continue just going to do one option for this contract and since we're selling it I'm just going to pay a lower price you know I'm collect a lower price than I normally would just so we can see this execute for you guys live here all right review order submit boom executed right we are in this trade now so we sold one bearish call spread okay even though calls are usually when you expect prices to go up but when you're selling them that's because you're expecting prices to go down okay so now to be able to get out of this trade instead of having to buy this back and sell this as two as a two-leg option you can just go into your main Robin Hood account click on the trade that you just placed or you know depending on when it is you want to get out just you can just click on close and easy as that okay so I'm GNA I'm going to buy this back at 210 I'm just paying an extra premium just so we can see this execute and here we are all right executed and we are out of this trade so you know I'm going to make some other videos that go into more detail about exactly when to use these strategies and things like that and exactly how much collateral gets tied up compared to the premium that you're collecting I'll go into that in a different video where that's all we're talking about in this video I just want to show you guys how to execute the actual trade okay and again nothing in this video is financial advice it's all for informational purposes do not copy these trades because these were just examples okay um but you know I'll I'll be making those videos so make sure you do subscribe to my channel and uh hit that Bell so you get notified whenever I do Post new videos and if you guys like check out my all access patreon I've got a link to it in the description below and for full access super cheap to get in and I've got educational resources in there my weekly watch lists I post on there even when I get in and out of Trades I post on there so you guys get alerted on those and there's also a live chat room too so yeah check out my uh full access patreon and then um uh just hit that like button rack this video up with likes and I will see you guys on the next one