Credit spread step by step

Discussion in 'Options' started by happy98, Jun 25, 2006.

  1. happy98


    Any one can share any credit spread strategy procedure step by step ?
    • Buy options (puts or calls) 4-6 weeks to expiration.
    • Sell equal amount, same expiration, different strike, higher $ value.
    • The farther the strikes are apart the more profit can be made BUT greater possible loss.
    • Try selling ITM and buying OTM, 1 -2 strikes apart.
    • Watch when earnings are because IV will prevent the options from falling in value, which is not what you want - you want the value to drop.
    • Maximum profit is premium received minus buying the options - maximum loss is difference of strikes minus premium recieved.
    • Hard to find good credit spreads because premiums are low. Reward/risk ratios are usually not very good.
  2. tradeoffs
  3. ozzy


    You lazy fuck. Ever hear about somethýng called reading or doing your own research.
  4. happy98


    thank you for your reply...
    i am not lazy i simple want to find other ways for this credit spread strategy..coz i am using Adv get XTL and moving average for my index option credit spread but i find it is not very effective (once in 2-3 months) i want to find out more...
    for stock option, i use "volume spike" system
  5. happy98


    SPX Credit Spread Trader journal by optioncoach is great but is too long...
    can anyone summarise what is his strategy and how to find those trades?
  6. lol..... just read the first couple of pages..

    there are no shortcuts in trading or cookie cutter recipes
  7. happy98


    thank you