When To Use A Debit Spread vs. When Credit Spread

RacerNic

By Nicolas Chahine — Author

An easy 10 minute comparison from my perspective on when to you credit spreads vs. debit spreads.

Credit spread: When I set a credit spread, I take in credit into my account. If my trade is successful (price stays away from my trade) then I keep the entire premium. I can close a credit spread by buying it back at any time before expiration.
Debit spread: To open a debit spread I have to pay a premium. I profit if I guess correctly and price moves in the direction of my spread making it worth more than what I paid. I can then sell it and keep the difference as profit.

Let me know if you have any questions.

Nic.

Posted to Create Income with Options … on Nov 24, 2014 — 8:11 PM

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{[comment.author.username]} {[comment.author.username]} — Marketfy Staff — Maven — Member

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