Credit Option Spreads

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What is a Stock Option Credit Spread?

December 2, 2007 · Leave a Comment

A definition with an example of how to trade a credit spread
clipped from creditoptionspreads.com

It is a trading strategy in which you buy an out of the money option at a certain strike price and then you sell an out of the money option at a different strike price of the same month. As time goes on the options will decay in value and as long as the price of the stock does not go past the sold strike price at the end of expiration you will receive a full credit winning trade.

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Categories: Uncategorized