credit spreads

Discussion in 'Options' started by savage, Aug 20, 2002.

  1. savage


    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


  2. 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.