Most options traders start the same way. They buy calls or puts… and hope the stock makes a big move fast enough to win.
But there’s a problem: Time decay.
Even if you’re right on direction, your trade can still lose money if the move isn’t strong enough — or doesn’t happen quickly.
That’s where credit spreads come in.
Long Options vs. Credit Spreads
In this recent video explainer, options expert Rick Orford describes two ways to express the same market view:
1. Long Options (Speculative)
- Buy a call → need price to move higher
- Buy a put → need price to move lower
There’s high upside potential with this type of premium buying options strategy… but there’s also high dependency on timing.
The stock has to move far enough, fast enough, to overcome the impact of time decay on the option’s premium.
2. Credit Spreads (Risk-Defined)
- Sell a put → bullish view
- Sell a call → bearish view
To create a credit spread, you’d buy the same type of option at a deeper out-of-the-money strike, which limits risk.
Now, instead of needing a big move… You just need the stock to stay on the right side of your short strike.
Why This Matters
With credit spreads:
- You collect premium upfront
- Your risk is defined
- You don’t need a massive move to win
For example:
- A bull put spread profits if the stock stays above your strike
- A bear call spread profits if the stock stays below your strike
This shifts your edge from prediction → probability
How to Find These Trades Faster
Instead of manually searching for setups, you can use Barchart tools to filter for high-probability trades.
With the Options Screener, you can:
- Scan for bull put and bear call spreads
- Filter by days to expiration (30–45 days)
- Analyze probability of profit
- Compare max risk vs. reward
You can also use:
- Barchart Opinion → confirm trend direction
- Trader’s Cheat Sheet → time entries and exits
- Options Data Dashboard → evaluate volume and sentiment
The Real Takeaway
Long options can deliver big wins. But they require precision and timing.
Credit spreads offer a different approach:
- More consistency.
- Defined risk.
- Less reliance on big moves.
And for many traders, that’s the difference between guessing… and building a repeatable strategy.
Watch this clip on Credit Spreads Explained:
- Stream the full video with Bullish & Bearish examples
- Scan for credit spread setups using Barchart’s Options Screener
On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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