Credit Spreads

A credit spread is an option spread strategy in which the premiums received from the short leg(s) of the spread is greater than the premiums paid for the long leg(s), resulting in funds being credited into the option trader's account when the position is entered.

The net credit received is also the maximum profit attainable when implementing the credit spread option strategy.

Vertical Credit Spreads

Bull Credit Spread

The bull put spread is the option strategy to employ when the option trader is bullish on the underlying security and wish to establish a vertical spread on a net credit.

Bear Credit Spread

If instead, the option trader is bearish on the underlying security, a vertical spread can also be established on a net credit by implementing the bear call spread option strategy.

Non-directional Credit Spread Combinations

Spreads can be combined to create multi-legged, credit spread combinations that are employed by the option trader who does not know or does not care which way the price of the underlying security is headed but instead, is more interested in betting on the volatility (or lack thereof) of the underlying asset.

Bullish on Volatility

If the option trader expects the price of the underlying security to swing wildly in the near future, he can choose to implement one of the following spread combination strategies on a net credit.

Bearish on Volatility

If instead, the option trader expects the price of the underlying security to remain steady in the near term, he can choose to implement one of the following credit spread combination strategies.

Ready to Start Trading?

Open an account at and get 100 commission-free trades + free virtual trading tool!

Your new trading account is immediately funded with $5,000 of virtual money which you can use to test out your trading strategies using OptionHouse's virtual trading platform without risking hard-earned money.

Once you start trading for real, your first 100 trades will be commission-free! (Make sure you click thru the link below and quote the promo code '60FREE' during sign-up)

Click here to open a trading account at now!

Follow Us on Facebook to Get Daily Strategies & Tips!

Basic Spreads

Options Strategies

Options Strategy Finder

Outlook on Underlying:

Profit Potential:

Loss Potential:


No. Legs:

Join the Discussions @ The Options Forum

Beginners Questions

Advanced Strategy Talks

RSS Feed Widget

Trading Ideas & Opportunities

Home | About Us | Terms of Use | Disclaimer | Privacy Policy | Sitemap

Copyright 2016. - All Rights Reserved.