Credit Spread Options Strategies Explained (Guide w/ Examples)

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The two credit spread options trading strategies are very simple to understand and set up, but also extremely powerful.

Credit spreads are very popular options strategies among income-driven traders, as they have a high probability of profit, have limited loss potential, and are easy to manage.

In this video, we’ll clearly explain what a credit spread is, how they are set up, and go through examples to show how they profit.

Credit spreads can be constructed with all call options or put options. When constructed with all calls, the strategy is a call credit spread (sometimes called a ‘bear’ call spread since it’s a bearish strategy).

When constructed with all puts, the strategy is a put credit spread (sometimes called a ‘bull put spread’ since it’s a bullish strategy).

In this video, we cover two examples using historical option data to show you exactly how these two strategies make money and lose money.

Lastly, we’ll show you how to set up each strategy using the tastyworks trading platform.

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