The Complete Guide
Master the art of generating consistent monthly income with one of the most popular options strategies. Learn from 10+ years of real trading experience on SPY.
A put credit spread is an options strategy where you simultaneously sell a put option at a higher strike price and buy a put option at a lower strike price. You collect a net credit (premium) upfront, which is your maximum profit if the underlying stays above your short strike at expiration.
The strategy is called a "bull put spread" because it profits when the underlying asset stays flat or goes up—you're bullish or neutral on the market. On this website, I've been trading put credit spreads on SPY since 2014 with full transparency.
Sell at higher strike (closer to current price)
Buy at lower strike (for protection)
Net premium collected upfront
Spread width minus credit
For a detailed breakdown with examples, read my guide: What Is a Put Credit Spread?
I've tested many options strategies over the years, and put credit spreads remain one of my favorites. Here's why they work so well for income generation:
By selling out-of-the-money puts, you can create trades that win 65-80% of the time. The underlying doesn't need to go up—it just needs to not crash.
Unlike naked puts, your maximum loss is always known and limited. The long put acts as insurance, capping your downside at the spread width minus credit.
As a seller of options, theta works in your favor. Every day that passes, the options you sold lose value—which is exactly what you want.
Put credit spreads allow you to generate regular income from the market, similar to collecting rent. Use it to supplement income or grow your account steadily.
I focus on trading put credit spreads on the SPY ETF (S&P 500 index fund). SPY offers high liquidity, tight bid-ask spreads, and predictable behavior based on historical data.
I trade spreads with a $2 difference between strike prices, keeping position sizes manageable.
Short strikes are placed at least 4% below the current SPY price for a safety buffer.
Targeting spreads that expire within 45 days balances premium collection with time decay.
I only enter trades that collect at least $0.18 per spread to ensure adequate compensation for risk.
Read the full strategy breakdown: Baseline Strategy for Trading SPY Put Credit Spreads
I believe in full transparency. On this website, I share my actual trading results—including both wins and losses. This isn't hypothetical backtesting; these are real trades placed with real money.
These results include every trade—the good, the bad, and the ugly.
While put credit spreads offer many advantages, they're not without risk. It's important to understand what can go wrong:
Even with a high win rate, losing trades happen. When the market drops sharply, you can experience significant drawdowns. I've written about this in What I Learned from 2025 Losses.
Put credit spreads typically risk more than they can make. A $2-wide spread collecting $0.20 risks $1.80 to make $0.20. One losing trade can wipe out multiple winners.
During major crashes (like March 2020), even spreads that seemed far out-of-the-money can be threatened. Having a plan for extreme events is essential.
To trade put credit spreads successfully, you need to understand these foundational concepts:
Combine cash-secured puts with covered calls in a systematic cycle. Get paid to wait for stocks you want to own, then collect more premium while holding.
Combines a put credit spread with a call credit spread for a neutral market outlook. Profit when the market stays within a range.
Ready to start trading put credit spreads? Here's my recommended path:
Make sure you understand put options and how put credit spreads work before risking any money.
Practice with simulated money until you're comfortable with the mechanics of entering, managing, and closing positions.
Begin with 1-2 contracts and small position sizes. You can always scale up once you've proven your process works.
Study how the strategy performs in real market conditions at the results page. Learn from both wins and losses.
Get comprehensive video lessons, real-time trade alerts, and direct access to ask questions about your trades.