Advanced Trading Strategies – Credit Spreads by TradeSmart University
Stagnant markets are always difficult. Difficult to determine when the breakout is happening and difficult to sit on your hands waiting for a new trend to evolve. For many years one of the favorite ways around this type of market is to sell options. The natural time decay makes option selling a great strategy when the market is “stuck”. However many people do not want to take on the risk of naked option selling – enter the credit spread.
Credit spreads allow the trader to take advantage of option selling strategies while creating a limited risk profile that does not leave them heavily exposed if the trade goes poorly. For this reason many would be option sellers gravitate towards strategies like the credit spread. It’s natural odds of success are 66% or better, and they also provide a limited risk.
You Will Learn
Make steady income selling options
Selecting options to sell
Low risk selling strategy
Unwinding a spread
Limited risk/limited reward strategy