How Often Your Spread Has To Win
Hey trader, Every option spread comes with a price. That price sets your required win rate, the share of trades you need to win. A spread is two options traded together, one bought and one sold. The distance between the strikes is the width, which caps the payout. Overpay for that width, and you need to win more often than the market expects. Good setups can still bleed money over time when the price is wrong. On Thursday, I ran this math in the end-of-day room on a Walmart call spread. It cost $3.40 for a spread $6 wide. That price set my required win rate at 56%. The platform put the odds at about 57%, so I knew I wasn’t overpaying. A Broadcom spread I priced that afternoon needed 67% against the platform’s 62%. Running this check takes one division and a number your platform already shows. You can