Options Wonderland

[leemalone2k3]

One area to consider is that directional trades (long calls or puts) are your highest risk trades. Theta is constantly working against directional plays. With these high risk plays come high rewards and high losses too.
A vertical trade accomplishes several things.
1. It is cheaper to enter a vertical instead of a directional.
2. The stock doesnt have to move as far to make a profit.
3. The probability of a winning trade is increased with verticals. In some cases, the stock can remain flat or even move against you slightly and you can still profit. With this increased probability, you limit risk which limits your gains.
4. Legging in and out at the proper time can produce profit in all directions.

Going for the big kill by playing directional is less important to me than getting a winning trade (and less stressful)