Limited Risk With Limited Profit
Option Credit Spreads
Selling options is usually a good idea. Hereís a
tactic to do it.
by Lee Lowell
Option trading all comes down
to probability of profit.
Statistically, option sellers
always have a better chance of
profiting. Itís true that when
you sell options your profit is
limited, but your chances of walking away
with that profit are high. The reverse is true for
option buyers. Their potential profit is
limitless, but the odds of achieving that profit
are very small, especially with out-of-themoney›
Why not put the odds of success on your side
and learn how to become a smart option seller?
Naked (uncovered) option selling entails
unlimited risk and limited profit, but there is a
strategy of option selling that has limited risk as
well as limited profit. Itís called a credit spread.