What’s a call credit spread?

The basics

Leon Smith

Last Update 5 mesi fa

A call credit spread is an options trading strategy you might use when you think a stock price will stay relatively flat or fall before a certain date (i.e., you have a neutral to bearish outlook). It comes with a risk of limited losses and the potential for limited profit. The strategy involves one short call and one long call on the same underlying stock.

When you open a call credit spread, you sell a call (at a lower strike price) and buy a call (at a higher strike price) both expiring on the same day. This strategy is also known as a bear call spread or a short call spread.

Source: https://robinhood.com/us/en/support/articles/advanced-options-strategies/

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