Credit Spread

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Of all of the different option strategies out there, the credit spread technique is probably one of the most well-liked, the most talked about, one of the most used (or abused depending on how you look at it) [...]

When the market tanked on Thurs – May 6, 2010 – the VIX spiked over 40 and the vols soared. Then the market bounced back up pretty quickly, and around 20 minutes before the close, talk started coming out on the networks that the huge drop was due to some ‘fat finger’ error by some [...]

Today when the market went nuts (dow dropping 1000 points) our TOS platform started acting haywire. Risk graphs were creating crazy formations for awhile there, then our net liquidating value suddenly said we had over 20 million dollars available.
Tried as I might, I was never able to  liquidate any of that before it corrected itself [...]

There are numerous option spread strategies non directional option traders can use to profit from the market without having to ‘know’ or be necessarily ‘correct’ about market and/or stock direction.
These include the iron condor, the butterfly spread, the diagonal and the double diagonal, the calendar spread – the double calendar spread – and, the credit [...]

The credit spread option strategy can be played with either call options or put options. A credit spread / vertical spread placed with calls is called a bear call spread – while those that are placed with puts are called bull put credit spreads.
An example of a bull put credit spread would resemble the following…
Sell [...]

The credit spread option strategy can be used with either call options or put options.
For the most part this option spread is used when the trader placing it feels that the stock being used will not breach the short strike chosen for the spread which does make this trade somewhat of a directional play.
For example, [...]

When discussing option spread strategies, the opposite of the option credit spread is the option debit spread.
While credit spread option techniques bring premiums in the form of credits INTO a traders account, debit spreads do just the opposite as the title of this method suggests – it pulls a debit out of the account. Also [...]

The bull put spread is one of the option spread strategies that option traders utilize either as a stand alone method to capture profits from a bullish stock, index, or ETF – or – it is a ‘component’ of one to several other option spread strategies – for instance the iron condor option, the butterfly [...]

The put spread is one of the option spread strategies that can serve several different purposes. First however, let’s take a quick look at just what a put spread is. Here is an illustration -
Sell 7 DIA Strike 100 Puts Options
Buy 7 DIA Strike 99 Puts Options
This option spread will bring a credit into the [...]

There are a number of option spread strategies non directional trading investors can use to generate consistent income from the markets. These include: option credit spread, iron condor spread, butterfly option, diagonal spread, calendar spread, etc.
One of the more simple – or easier to understand spread option strategies is the credit spread – or the [...]