Credit Spread Strategy
Credit spreads (bull put spreads and bear call spreads) are defined-risk options strategies that collect premium upfront. You sell a higher-premium option and buy a lower-premium option at a different strike, profiting from time decay and/or a directional move.
Trade Credit Spread Strategy setups with Tradewink
Get AI-scanned credit spread strategy ideas with full analysis, risk levels, and broker-connected execution.
How It Works
- 1
Choose direction: bull put spread (bullish) or bear call spread (bearish)
- 2
Sell the near-the-money option at 20-30 delta for the short strike
- 3
Buy a further out-of-the-money option as protection (defines max risk)
- 4
Target 30-45 DTE for optimal theta decay curve
- 5
Close at 50-65% of max profit or manage if short strike is breached
Best For
Related Guides
Options Trading Strategies for Beginners: Covered Calls, Puts & Spreads
Complete options trading strategies guide for beginners. Learn covered calls, cash-secured puts, vertical spreads, and how Tradewink's AI automates options entry and exit decisions with real-time conviction scoring.
Implied Volatility Explained: The Most Important Number in Options
Implied volatility determines whether options are cheap or expensive. Learn what IV means, how to read IV rank, and how to use volatility to your advantage.
Options Trading for Beginners: Everything You Need to Know in 2026
A complete beginner's guide to options trading. Learn about calls, puts, strike prices, expiration, the Greeks, basic strategies, and how to avoid the most common mistakes new options traders make.
Related Strategies
Related Signal Types
Frequently Asked Questions
What is a credit spread?
A credit spread involves selling one option and buying another at a different strike price in the same expiration cycle. The credit received upfront is your potential profit if the spread expires worthless.
What is the difference between a credit spread and an iron condor?
An iron condor is simply two credit spreads combined (one on each side). A single credit spread is directional, while an iron condor is market-neutral.
Get free alerts for Credit Spread Strategy
Receive strategy breakdowns, new signal summaries, and learning updates tailored to credit spread strategy.