Options 101 Chapter 3: Debit & Credit Spreads

Hey Traders!

I hope you enjoyed Options 101 Chapter 1: The Squeeze, in addition to Chapter 2: Puts, Calls, and Debit Spreads, because now it’s time for Chapter 3!

During the next installment, I reviewed some key facets of puts, calls, and debit spreads before I focused on credit spreads.

I like using put credit spreads as a core, options trading strategy because:

  • They are more conservative than puts, calls, or debit spreads
  • It’s a method of selling premium, versus buying premium
  • You can make money without the stock needing to move exponentially
  • Your risk is defined based on how they are set up
  • …and more!

Want to learn more about credit spreads, including how they are set up, where your risk lies, and more? Check out the video below!

As I mentioned in the video, selling credit spreads is one of my favorite defined-risk options strategies, especially for those working on growing small accounts. These strategies typically work best when the market is moving in a directional manner, though, as I mentioned with credit spreads, you don’t actually need a ton of price movement for theta decay to work in your favor. This is especially the case during earnings season, specifically over earnings reports.

Earnings Season Opportunities in the Options Market

This is why one of my favorite times to trade in a directional manner, using a variety of options strategies, is during earnings season. The unique environment in which we have rising, and then falling, implied volatility, provides distinct moments to take advantage of theta decay. As we’re now into October, that means earnings season isn’t far away! As I discussed in my webinar last week, my primary focus this month is on identifying directional opportunities backed by statistics.

Why? This month as we are in the Hot Zone on many key stocks, and will be entering the Hot Zone on many more, coming up soon!

Want to identify key, statistical opportunities this month?

Check out the Earnings Hot Zone, which is on sale, below…!

 

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