The catch is if your strategy is not well planned or implemented with discipline. Meaning that what makes the 3 factors so definitive when trading credit spreads is implementing a brilliant strategy with fidelity.
Education
A put credit spread (also called a bull put spread) is an options strategy where you sell a put option and simultaneously buy a lower-strike put option, collecting a net credit. It's one of the most popular income-generating strategies because it profits when the underlying stock stays flat or goes up—and you get paid upfront. In this guide, I'll explain put credit spreads using a simple insurance analogy, walk through real examples with actual numbers, and show you when and why traders use this strategy.
A put option is a contract that gives you the right, but not the obligation, to sell an asset at a specific price within a set time period. Put options are one of the two basic types of options—the opposite of call options—and understanding them is essential for anyone looking to trade options or protect their portfolio. In this guide, I'll explain put options using a simple real-world analogy, then show you how they work with actual stock examples.
A call option is a contract that gives you the right, but not the obligation, to buy an asset at a specific price within a set time period. Call options are one of the two basic types of options (the other being put options), and understanding them is essential for anyone looking to trade options. In this guide, I'll explain call options using a simple real-world analogy, then show you how they work with actual stock examples.
Wall Street is the domain of traders and investors. Typically we envision traders sitting in front of rows of monitors looking to make a quick buck by continually getting into and out of financial positions. In contrast, investors are the Warren Buffett types who buy and hold stocks for long periods of time.
