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ODDS® The Official Website of Option Trading Expert Don Fi shback

With a credit spread, do I keep this until expiration or get out before it expires?

We have faith in our calculations when we implement a credit spread & will therefore hold to expiration.  Even if the trade looks like it is going against us, we will still hold, as our probability on a credit spread is so high that it will be profitable, and most times it will turn around and correct itself and be a max winner. 

There can be instances where we will buy back the option we sold, and keep the option we bought, to therefore lock in a profit, release our margin, and maybe make additional profit with the option we still hold.  But this depends on a lot of things, such as the price to buy it back, if there is a feasable reason to do so, etc.

 The goal in a credit spread trade is to let both options expire worthless.  If both options expire worthless, then you make a max profit on the trade.  You won't win every time, but with probability close to 90%, you will win many more times than you lose.




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