Options Series – #1 Credit Spreads

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Some rule of thumbs for establishing credit spreads (from TastyTrade)

– short delta 30 strikes

– seek to collect 1/3 of the width of the strikes in premium sold. 

– based on a short 30 delta, long strike should be optimally placed between 10 and 20 delta, at which would grant you 1/3 of the width of the strike and maximize your profit/loss 

– if short strike delta is at another level, your long strike would be optimally placed between 10 to 20 delta less than your short strike.

Some rule of thumbs for establishing credit spreads (from TastyTrade)

– short delta 30 strikes

– seek to collect 1/3 of the width of the strikes in premium sold. 

– based on a short 30 delta, long strike should be optimally placed between 10 and 20 delta, at which would grant you 1/3 of the width of the strike and maximize your profit/loss 

– if short strike delta is at another level, your long strike would be optimally placed between 10 to 20 delta less than your short strike.

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Options Series – #1 Credit Spreads