Credit Spread

Market Terms

We don't know everything about the markets.  We're just devoted to learning.  Taken from those smarter than ourselves, here's how we define Credit Spread.

An options strategy involving the purchase of one option and the sale of a second option in the same class and expiration but with different strike prices.  This is designed to make a profit when the spreads between the two options narrows.  Investors receive net credit for entering the position, and when the spread narrows or expires, are able to collect their profit.  This is in contrast to a debit spread, which an investor would have to pay to enter.