Credit Spread Strategy: The Defined-Risk Premium Seller's Playbook

Credit spreads are the most common premium-selling structure that retail traders should actually be using. They give you the IV-decay edge of selling options without the existential risk of selling them naked. This guide covers both bullish (bull put spread) and bearish (bear call spread) flavors.

Bull Put Spread (bullish)

• Sell one OTM put at strike A (closer to spot)
• Buy one further OTM put at strike B (B < A)
• Collect net credit upfront
• Max profit = credit (kept if stock stays above A)
• Max loss = (A − B) × 100 − credit (if stock crashes below B)
• Breakeven = A − credit per share

Use when: bullish on the stock, IV rank above 40, expectations the underlying holds a known support level (prior swing low, key moving average, gamma support).

Bear Call Spread (bearish)

• Sell one OTM call at strike C (closer to spot)
• Buy one further OTM call at strike D (D > C)
• Collect net credit upfront
• Max profit = credit (kept if stock stays below C)
• Max loss = (D − C) × 100 − credit (if stock rips above D)
• Breakeven = C + credit per share

Use when: bearish or neutral-bearish on the stock, IV rank above 40, expectations the underlying fails a known resistance level (prior swing high, key moving average, dealer call wall).

Where OptionsDeck helps

The single biggest leverage on credit spreads is regime read. OptionsDeck's dealer GEX dashboard tells you whether dealers will defend your short strike (positive gamma above the flip = good for credit sellers) or expose you to gappy moves (negative gamma below the flip = bad). Combine with IV rank above 40 and the AI Strategist's directional read and you have all three legs of the trade decision.

Build the exact structure in the strategy builder to model P/L, breakeven, and Greeks before placing the order.