Today, I’m going to do everyone a big favor and demystify simple credit versus debit spreads.
So in this short video, I’m going to explain the difference between credit and debit spreads, and give my rules of thumb for trading them. I’ll cover using a credit spread to help finance a debit spread, highlighting the importance of considering the VIX Volatility Index in trading decisions.
📈 Debit spreads are a good option when the VIX and implied volatility are low.
📉 Credit spreads can be used as an income strategy, especially when the VIX is high.
💰 Bull call spreads are a debit spread that involves buying a call option and selling a higher-strike call option.
💲 Bull put credit spreads involve selling a put option and buying a lower-strike put option.
🔄 Limited bullish risk reversals combine a bull put credit spread with a bull call spread to reduce risk and potentially increase profit.
Lance Ippolito
Lance Ippolito Trading
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*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
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