A credit spread is a strategy employed in options trading that involves simultaneously buying and selling options of the same type (either calls or puts) on the same underlying asset, but with different strike prices and the same expiration date. The aim is to profit from the net credit received when initiating the trade. The tastytrade platform provides tools and resources to facilitate the implementation of this strategy.
Utilizing credit spreads can offer limited risk with defined profit potential. By collecting premium upfront, the trader benefits from time decay and potentially decreasing volatility. This approach gained popularity among retail traders due to its structured risk profile and accessibility through platforms like tastytrade, which offer educational content and streamlined execution tools.
