Credit Spread – The Preferred Option Investment Strategy
Monday, August 22nd, 2011
A preferred non directional trading strategy is the option credit spread. This strategy one of the easier option spreads to comprehend for newer option traders. In addition it is simple to place, there is not much to do management wise while the trade is on – or in other words the credit spread trader doesn’t need to be tied to their trading chair inspecting every up tick and down that the market makes all day.
The credit spread is a fundamental element to numerous other option spread strategies including the iron condor, the butterfly spread, the double diagonal and others. It if fairly common for beginning option traders to gravitate to this strategy soon after discovering options and once they have gotten their feet wet with the purchase of straight calls and puts, then covered calls, and debit spreads.
