How to Trade Credit Spreads for An EDGE! MUST KNOW Credit Spread Trading Secrets

[@OptionsPlay]

Hey everyone! I hope you enjoyed this video. If you're looking for more quality content like this make sure to check us out! optionsplay.com

[@garybaxter3871]

Engulfing candlestick is a sign of big institutional trade. Green=buys. Red=sells

[@joana9479]

Thank you for making it easy to understand and like your calm voice!

[@OptionsPlay]

My pleasure, Joan!

[@arielcruz4847]

Really great video! You broke it down in a way very easy to understand. I have a question, I watched a video of Tony and Sosnoff and Tom explained that when low IV it is better to be an option buyer and vice versa. A little different from what you said. Can you please clarify?

[@frybrain9880]

Are you talking about buying or selling options? I think he was referring to credit spreads.

[@torsnewbie249]

Dan thanks for this Webinar. Very helpful suggestion regarding using support and resistance to select the strike. Much better than using Deltas. I definitely agree. Thanks

[@OptionsPlay]

Glad this was helpful!

[@DavidTran-hf3hn]

When he mentioned he like going shorter time frame when credit spread , how many days is considering ?

[@frybrain9880]

Well-explained class! Thank you for making this video.

[@seangreen8262]

Great presentation. Thanks. When would you do a diagonal over and above the credit spreads?

[@brianquigley6862]

I always trade diagonals bc I never know which direction the mkt is going. The hedge allows me to participate, the short finances the PUT. For example maybe pick a stock you like, buy 2-3 months 55 Delta. Then sell a 30 Delta one week so theta really goes to work. That means ur 25 Delta long. That's your risk. Finally buy a 3 week 40-45 Delta put. Each week you can sell premium that pays off the put and now you hope stock goes up and you win on growth. That 55 Delta will make u $$$ and ur protected at all times. There's more to it but it's basically a collar. Most of my money made this year is from the put bc all these gaps.

[@seangreen8262]

@@brianquigley6862 Thanks Brian Just as a clarification, you have mentioned that you buy 2 - 3 months DTE, 55 deltas, then you have mentioned "finally buy 3 weeks DTE 40-45 delta puts." When are you buying the 40 delta puts? Or is this instead of 55 delta put? Thanks again

[@gladyswj9968]

I LIKE THE CLARITY: THE SHORT OPTION IS THE TRADE, THE LONG OPTION IS THE PROTECTION. GOT IT.

[@OptionsPlay]

Glad you enjoyed :D

[@jamba_d2225]

I think the discussion of volatility was confusing. The beginning slides said we want low volatility, because in high volatility environments we'd be better off being long calls or puts. At the end, it was stated that high IV rank was good because option prices are inflated and we want to collect inflated premiums. If there is some optimization formula for weighing the trade-off of opportunity cost vs. premiums vs. vega, then that would be good to know.

[@quest0rsw521]

Agree. The emphasis on high implied volatility (i.e. higher premiums) as important factor for selling creadit spreads seemed to somehow contradict the initially proposed trading strategy (low volatility environment, profit from positive theta).

[@weilinyu4388]

Where can we find the PPT slides?

[@ericaroundtheworld]

Another whale alert Please teach me how do u interpret this information and how do u use this information to trade or as a reference? Thanks. Msft call option Sentiment : bullish Expires : march 25, 2022 (in 44 days) Transfer 158 contracts to strike price 330 (Meaning that by 25 march. The buyer believe that the stock price of msft will be higher than 330 right ??) $291 / contract Which means The stock price would need to be 332.91 for the buyer to break even 330 + premium (291/100) ?? So we are expecting price of msft will be up over 333 by March 25? Is that how we read this ??

[@sarahserio4303]

yes essentially, but you never know if the person was perhaps actually hedging a position in and underlying stock position. That's what's hard about UOA.

[@patwhitmore3819]

Why not trade atm spreads 50 delta. Say credit 52 loss 48. Make money if wrong and bigger premium if right. I'm just starting spreads. What are risks i am not seeing. Thx

[@brianquigley6862]

Risk is less but probability extremely high to be wrong. You almost have to have a crystal ball and be dead on perfect. Nobody can do that

[@jamba_d2225]

You need to rethink the concept. If you get 52% or .52, that probably means you are ITM, in order to profit the stock needs to move towards ATM and above. If the stock stays where it is, you will have to buy it back for .52 and make nothing, if it goes against you, then you have to buy it back for greater than .52 and take a loss.

[@badgerfishinski6857]

When do you decide to close a losing spread? What criteria do you use ?

[@badgerfishinski6857]

When do you decide to roll a credit spread?what criteria?

[@ScattMatt3000]

I’ve been watching your videos for a long time. And I don’t see the edge in trading credit spreads or spreads in general. rather than scalping. For example when scalping you limit your time in any particular trade and exposure to tail risk. When trading a credit spread or a debit spread, you have to be a seller if you do not want to get crushed by theta decay. Not to mention it is usually harder to close it due to the range in the bid ask spread. If you could address these issues that would be great

[@merrickhemmings]

In my opinion, it is way easier to find an edge in trading credit spreads than scalping. For example, in a put credit spread (OTM) positioning your short leg below major support. If you are planning on holding until expiration, this will allow you to avoid many obstacles in normal long calls. Such as avoiding theta decay, allowing the price to drop a few points, and being short volatility. Even being short volatility you have a much greater chance in the market. Since IV is expected to drop over time. This is my thoughts on credit spreads over long calls/puts anyways. Good luck trading. 👍✌️

[@Maggiemina]

I think it depends on the market condition we're trading. In volatile market condition (as we have seen in January), selling credit spreads can kill a person where risk far outweighs the reward. In more stable market condition or in well-defined directional market condition, I agree selling credit spreads are easy way to make profits as it gives cushion to be wrong. I would scalp or stick with day trading in volatile market condition and only swing trade low risk high reward trades (such as BFs or BWBs). But when market has good momentum and clear direction to upside, I wouldn't mind selling some pcs.

[@sarahserio4303]

I think you are convoluting two very different strategies. Credit spreads are designed to specifically to mitigate the issues you mention and are very different from debit spreads. You are selling credit spreads inherently, you buy debit spreads. As a result, you have positive theta and are short IV. Both make it so that the passage of time itself should contribute to your profitability. Also you can profit from credit spreads whether the stock goes in the direction you planned for, stays flat or goes a little bit against you. As long as you end up with both options OTM you make your max profit at expiration. That puts probability heavily in your favor. A common analogy is that you are playing the part of the casino or the insurance agency by selling credit spreads since there are so many ways to profit and the odds are so heavily in your favor.

[@sarahserio4303]

In addition, i've traded many many many credit and debit spreads and all kinds of options and I've rarely had much problem getting out of them when I want to as long as I don't trade a symbol that has very low options volume.

[@brianquigley6862]

Credit spreads are a fallacy. I don't know about scalping but in general all time decay spreads are fool's Gold bc theta is irrelevant once the Delta and IV start moving. I trade diagonals with a hedge all the time. Time spreads are deemed hedged but they aren't bc the trade isn't hedged, only the short leg is hedged but the trade itself isn't.

[@robertodiazjr7666]

This fucking dude YES YES YES!

[@tonyvu60]

suggest you include in the risk profile the probability of ITM at expiration, which really is the (1.0 - delta). If the probability is too high, then the trade is next to worthless. You are letting greed driving your trade.

[@mylearningcentre601]

Credit spreads are a high volatility strategies and debit spreads are a low volatility strategies for your information.

[@justinorwen1739]

Theres Fed meetings every month.

[@gregruhlanddeepsilver5418]

Have to disagree with selling credit spreads. They should be sold in high vol environments for higher premium and possible vol crush. If you are selling closer to the strike price you may want lower vol.

[@moindon159]

IV rank should have been one of the first things discussed in the video instead it was discussed at the very end and that was thanks to someone asking about it. Not impressed at all!

[@brianquigley6862]

I couldn't get thru this whole video. IV and Delta are so powerful that they squash theta if they get moving

[@BilalInSanDiego]

Why not do a longer date to expiry and farther out of the money?

[@brianquigley6862]

There is no right or wrong expiry. No magic formula. Credit Spreads are always in danger if Delta and IV start moving. That means a GAP against your position. I don't like these trades bc theta is useless when there's a Gap and this year there have been numerous gaps. The main advantage to further OTM is if there is a move against original position there is a small chance to adjust and get some money back. With ATM, you lose it all on the dreaded GAP.

[@BilalInSanDiego]

@@brianquigley6862 thank you.

[@brianquigley6862]

@@BilalInSanDiego you are welcome. I'm not sure what your experience is or what your goals are but I am fascinated with options but I trade with a hedge at all times. Credit spreads, Iron Condors etc are impossible to hedge. If anyone says spread trades are hedged

[@brianquigley6862]

Be careful bc these theta trades are Darn near impossible to truly hedge. Good luck sir.

[@jamba_d2225]

Every parameter to an option trade is a trade-off, you give up one thing to get some other thing. Farther out of the money means less money, but more likely to get the less money. Longer date means more time to be right, but also means your money is tied up for a longer period of time when it could be used elsewhere after a shorter dated trade.

[@wu-shianli8948]

A professor? All are only from books. Nothing insight, nothing inspiring...

[@OptionSpreadProfits]

So disappointing. 11min of theory without a practical example on how to place a trade, a chart, how to take profit and close the trade. 👊👎👎👎👎

[@stoneridgemenswear8600]

How is this quality content. This is the most basic and common knowledge you are sharing and you name the title as if you are giving us an edge. Very frustrating and waste of time. You could have named it basics of options.

[@devonk298]

lame