High Probability Option Credit Spreads

Run time: 58 minutes. Credit spreads provide a low-riskway to profit from selling options without taking on excessiverisks. However, traders may fail to maximize thepotential of the strategy by not understanding all the componentsinvolved. Options expert and former floor trader DanPassarelli explains the advantages of credit spreads; the dynamicsof spread pricing; and his method for selecting low risk/highreward credit spreads. Three factors drive the value ofa credit spread: time decay, the direction of the underlying stock,and volatility. While credit spreads naturally profitfrom time decay, they lose value if the market moves the wrong wayor if volatility increases. The challenge is tolessen risk factors by choosing the right stock, the rightoptions expiration month, and the right strike prices. Passarelli provides his insights into meeting these challengesbased on his long experience as an options floor trader. Heexplains why it's vitally important to choose a stock thathas just bounced off a support/resistance point, has low impliedvolatility, has strike prices at or just beyond keysupport/resistance areas, and will expire in the next two weeks totwo months. Passarelli provides anumber examples to show precisely how he uses this method in actualmarkets. Viewers will learn:

- Understand why option credit spreads are a greatstrategy for generating income, without taking undue risk.

- How to put the factors that drive options pricesto work for you, without having to understand complex formulas ormathematics.

- How to select the right stocks, the right strikeprices, and the right expirations to maximize the benefits ofcredit spreads.

- How to manage every step of an options spreadposition and to capture profits at the right time.

Passarelli has a gift for explaining options in a logical,easy-to-understand, and realistic manner. This video willgive viewers a solid foundation into how to use option creditspreads the same way as professional traders.