Weekly Options - Trading Weekly Credit Spreads

This strategy has been a widely utilized strategy by most Weekly Options traders. The good thing about this kind of option trading system is that it is very uncomplicated to do and easy to understand. Another good thing, specially for newer option traders, is the little amount of time required to manage and operate it. In other words, the credit spread sellers don't have to stick to their laptops or computers all the time just to watch the changes in the stock market and generate good income from this trade.

One important part of some other option spread strategies is the vertical spread. These option spread strategies include the iron condor, the butterfly spread, the double diagonal, etc. The usual thing for most beginners in weekly options trading is to head through this approach right after they have discovered the options and have decided to buy straight calls and puts, then covered calls, and then debit spreads.

As long as the weekly options trades are suitably invested, vertical spreads can highly help in the success of the investment. In addition, the investor still gains the right profit without necessarily going along with the price direction and movement. The good news with credit spreads is that the traders can still earn a good monthly profit even if their anticipation of the direction of the stock market could be incorrect.

Take a look at this example: our trader is bearish on the XYZ stock. The stock XYZ is recently trading high and our trader anticipates a slow movement over the next couple of days. A bear call spread is good for neutral to bearish circumstances so the trader sells this type of call option vertical spread.

If our trader's anticipation is correct, this means that the stock market heads to the negative direction and this Weekly Options spread trade wins. The good thing about it is that even if the outlook of our trader is incorrect and the stock moves up instead, the trade can still be won. This is as long as the market's movement is not too much. In other words, if the stock moves more rapidly than expected, this could lose the money. However, with proper management, this trade could still make profits and it could still give benefits.



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