Credit and debit

A debit trade costs money up front; a credit trade pays you up front.

Why it matters

Debit trades want a move and pay time decay. Credit trades want the stock to stay away from the short strike and collect time decay.

How to read it

Rule of thumb: if your idea is “this goes up”, a debit spread fits. If it is “this won’t go down much”, a credit spread fits.

Vertical spreadBuying one option and selling another of the same type and expiration at a different strike.IV rankWhere today’s implied volatility sits between its lowest and highest level of the past year, from 0 to 100.

In the Cluenex app, this explanation opens next to every credit and debit figure, with the live reading for the stock you are looking at. Open it in Cluenex

Credit and debit

Why it matters

How to read it

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