Can you guys verify if my thinking is along the correct lines on vertical spreads? My general strategy: is to swing trade equities, and hold them for about 3 to 6 weeks as an average timeframe. I am usually correct about 75% of the time, within the 3-6 week timeframe. A typical trade might be to buy SPY today, with an exit at 110, and stop at 70. My position size would be to win or lose 5% (if SPY hits my stop at 70, I would lose 5% of my trading account). Options: I started to buy call options on the underlying equities, as a substitute to reduce overall risk. I had a couple of occasions over the years where the equity would gap down by 20-30%, and I didn't want to expose that much of my account. In the SPY example above, I would usually buy the calls about 4-6 months out to allow enough time. Since buying calls, my overall performance has not been nearly as profitable. While my win/loss rate on the underlying stock / strategy was about the same. However, when my trade went well, I would only make a 3-4% profit. And if it did not go well, I would lose 6-7%. These were due to the time decay over 4-6 weeks, and usually a small drop in implied volatility (majority was due to time decay). Now trying Vertical Spreads: So, I wanted a simple strategy with limited risk, limited profit (I always exit at a predetermined point anyway), little risk for early assignment (I don't really want to start selling a lot of options), and relatively neutral to time decay and implied volatility decreases. I am leaning towards doing Long Call Verticals (or Long Put verticals if I think the stock is going down). My question is: given my underlying stock swing trade methodology described above, is it more optimal to buy OTM vs ATM vs ITM vertical spreads? Playing around on Think or Swim's Analysis page, it seems to me that the optimal strategy would be to buy a slightly ITM call, and sell the OTM call. Thus in the SPY example, I would buy the June 85 calls and sell the June 110 calls. The value of the spread should go up slightly with time decay, and also go up slightly when implied volatility drops a little. Is my thinking on the correct path here? Thanks for the help!