Credit Spreads

[jim2000 10]

Are credit spreads a good way to trade options?

[brownsfan019 17]

http://www.traderslaboratory.com/forums/f110/credit-spreads-2683.html

 

I'd ask Tin as he seems to be the only one actively posting here about them.

[greasy_pancakes 10]

Yes, I believe they are. Especially the options strategy involving selling put credit spreads. Very profitable, but you must do it with good money management and not be too greedy.

[Mercury77 10]

Are credit spreads a good way to trade options?

There is no edge in doing a credit spread instead of a debit spread. It looks interesting because of the premium you receive and because of that theta works in your favor. Chosing a credit spread over a debit spread has everything to do with your opinion about the market in terms of volatility and price and most important how you manage that position. For example Iron condors (selling an out of the money put spread and selling an out of the money call spread) on the S&P 500 index can be a good strategy, but only if you know what you're doing in terms of money management and risks you are willing to take. If you dont know what you are doing you are so bussy picking up nickles and dimes that all of a sudden you will be ran over by a bus. When this happens you are in total panic and because of that you will make even more mistakes (increase your position, roll over to the next month). So if you want to give it a try just begin very small and know what you are doing. The CBOE has some webcasts you might find interesting http://www.cboe.com/LearnCenter/OptionsInstitute1.aspx . Good luck!