Selling options can be risky if the stock moves violently against you. A Credit Spread solves this by adding a safety net. Think of it like being an insurance company, but buying reinsurance for catastrophic events.
You sell an option to collect a premium, but at the same time, you buy a cheaper option further away to cap your maximum potential loss. The difference between what you collected and what you paid is your "Net Credit." As long as the stock stays away from your sold option, you keep the credit.
When you have a directional assumption (e.g., "I don't think Apple will drop below $150 this month") but want strictly defined risk.
We analyze the SMA 50 and SMA 200 to find strong support and resistance walls, placing your spreads behind heavy technical barriers.
Vectorized screener for Credit Spreads is currently in development...