Among the range of vertical spreads, the bear call credit spread is of special interest to traders. Although it employs calls exclusively, it is used for a bearish sentiment. In a similar manner, its opposite, the bull put credit spread is based solely on puts but represents a bullish assumption. The bear call credit spread… [READ MORE]

The bear put debit spread is designed to limit losses, in exchange for also limiting profits. It combines a long in-the-money put with a short out-of-the-money put, each with the same expiration date. This sets up the limited profit and limited loss, illustrated in the payoff diagram. A profit is realized when the underlying moves… [READ MORE]

The bull put credit spread yields either a limited profit or a limited loss. This makes it a desirable strategy, in which the limits work out favorably for both sides. A limited profit is acceptable in exchange for a limited loss, making it a conservative strategy. When underlying volatility is high, this credit spread is… [READ MORE]