If you are inititiating a credit spread, what level of implied volatility would you prefer to have: high or low Bull Put Spread Bear Call Spread Thanks, Savage
if stock is at 50 and you want to sell at the money call by selling the 50 buying the 55, you'd want a sharper skew towards the puts (50 higher than 55 IV) and high vol since the spread is worth more with high vol than low vol. Just remeber ATm options have highest vega so you'd always want to write options in a high vol environment.