Options University 4: Income – Bull Put Spreads

Video Summary (2 minutes)

Many investors use the Credit Put Spread as an income-generating strategy, selling a put spread at a level they believe a stock will remain above. This level might be set by charting a support level, using the Expected Move, or simply by moving a Credit Spread far enough out-the-money that a desired risk, reward and probability ratio can be found. The lower, and farther out of the money a put spread is placed, the higher the Probability of Profit. BUT, a higher probability of profit means the ratio of what is risked, is higher, for a smaller potential reward.

COMPLIMENTARY READING

• Credit Put Spread Examples
• Cash Secured Put Alternative
• Glossary of Options Trading Terms
• 6 Option Spreads Explained (Videos)