 Good evening everyone, this is Hari Swaminathan from optiontiger.com It is March 28th Tuesday, and we are right about finishing our TraderMax live for this March session That's not what we're talking about today. We are going to look at What exactly do we mean by get an edge on a trade? First of all, we know with options that there are several strategies a type of edge on a credit spread May not be the same as an edge on a calendar for each strategy. You have to construct an edge What are these gorilla tactics and techniques that we're talking about? So I'm going to address that in this video today. Let's take any stock Okay, it doesn't matter because we're just using an example to see how you would build an edge into a trade So basically you come here come to the options Let's go out 10 days and say you wanted to construct a bull put I mean a bull call spread I'm just going to put you know take this 285 right now. So you want to buy a vertical Which would be the bull call Okay, so here it automatically puts the 2.5. Let's just go with the $5 spread and you're going to pay 1.31 Clearly the risk graph will tell you that your loss is max loss is 1 1310 and your max profit is going to be the difference between The $5 spread and what you pay So that's this This is your typical bull call spread, correct? What can you do to this trade right at the very beginning? That will give you an edge on the trade. So what exactly do we mean by an edge? So anything that can either Reduce your loss Or increase your rewards Without incurring negative consequences Can we agree that that would be an edge? So let me repeat that anything that would decrease your exposure Or anything that would increase your rewards Without it having negative consequences Or both if you can okay Or rather, let me put it this way, you know, everything has negative consequences. We know that The negative consequences are not that bothersome to you You're okay to accept those negative consequences So that's what we're going to do here Some of these edges are very simple. They're very subtle But once you start making a methodology once you start putting it into creating a weapon out of it Put it into your arsenal and you pull it out every time you you need it It becomes very very powerful. So I'm going to show you an edge right now on this bull call spread that you can put that will Significantly improve this trade Without it having negative consequences that will bother you. It's a it's a it's a matter of psychology and mindset You're taking this trade based upon the premise that tesla is going to move up some And over this purple line, you're going to take it off somewhere Correct. That's what a bull call is If this goes past then then what happens here? You're going to get max profit, right? 3690 Then Why can't we put a bear call there? Right here. So we have 285 290 Let's say at 300 Right, you sell a call a vertical 305 You get 40 cents back, which means now your risk profile is this You've gotten four hundred dollars back already now. First of all, that is a benefit You're getting four hundred and why I'm saying you're getting four hundred because For this trade to make a loss, it has to go through your profit first It has to go through your profit first. Okay, so while it's here in this range You can do whatever you want with it. You want to adjust it? You want to close it? You can do whatever It it still remains a bullish trade But now you've got 40 back. So now your max loss is what? 910 So you've reduced your loss Okay, one Two, you've increased your profit 4090 now is your max profit because you got an extra 400 So you've managed to accomplish both Decrease your max loss Increase your max profit. What are the consequences? What are the consequences of this trade? Of this rather, you know technique There is one consequence And that is beyond 300 You're going to give up a bit of your profit If you did not have this This is what your profile is You're guaranteed that 3690 by doing this tactic You're reducing your max loss by 400. So your exposure is reduced Your max profit increases if this outlook tub plays out Your max profit increases And the only negative is Beyond 300 You're giving up some of your profit. You're not giving up your principle bear in mind You're giving up some of your profit Is that an edge or what? That is absolutely an edge in your trades I'm describing a very simple example of an edge This kind of an edge However subtle it might be is required on every strategy Now many option traders may ask How is this an edge? All you did hurry was you took a bull call and then you added a bear call at the very end of it And how is this an edge? Well, it's an edge for a couple of reasons If you're just going to put a bull call Then wouldn't you put a bear call at some point beyond it? If you don't do that, why wouldn't you do that? Because You can take a point at 5 delta or 10 delta whatever you want depending on how much premium you want to get back You can always put a bear call there Provided you're you can accept the consequences. So what are the consequences? It is you're going to lose a little bit of profit beyond that point And if you put both the spreads together Your entire trade is going to move a little slowly because you you have positive delta And then you'll have negative delta from the bear call But you don't have to put it all together You can wait till your till the stock moves a little bit in your direction That is an edge by itself if you put a bear call after that So that's all up to you. I mean you can play around with the strategy But the point is if you trade bull calls Then you must accept that this is an edge because why would you trade a bull call alone when you can get this kind of an edge? So I don't trade any bull calls anymore because whenever I want to trade a bull call. I'm going to trade a long condor Because it makes so much more sense It it could give you a higher profit your losses are reduced your margins are reduced your risk is reduced The only consequences that you have to accept are the fact that You might lose a little bit of start losing some of your profit again. It's your profit. It's not your principle Let me make that clear because at the very end of the spread You're going to lose a bit of your profit and at some point you're going to do something about it You need these kind of edges Whenever you put a trade you have to try to think of how you can make that trade and just a little bit better Not every trade you can be successful in creating an edge At option tiger we have created edges for various strategies and all of them add something to the trade And that particular thing sometimes can make the difference If you enjoyed this video, please leave us a comment if you have any questions Please send us an email info at optional tiger dot com. Thank you