Educational only, not financial advice or a strategy recommendation. Options strategies carry risk, including of substantial loss. The strategies here are explained for understanding, not endorsed.
A 0DTE credit spread sells an out-of-the-money option and buys a further one for protection — collecting premium on a directional-or-neutral view with defined risk. It’s the building block of the condor and fly.
How it works
Sell an OTM option (call or put) and buy a further-OTM one of the same type — you collect a net credit. A put credit spread (bullish/neutral) profits if SPY stays above the short put; a call credit spread (bearish/neutral) profits if SPY stays below the short call. Max profit is the credit; max loss is the strike width minus the credit — both defined.
Why traders use it (and the risk)
Credit spreads let you profit from time decay and a favorable-or-flat move, with capped risk (better than naked selling). But like all premium selling, the risk exceeds the reward per trade — you win often but lose more when wrong, so discipline and management are essential. On 0DTE, breaches happen fast.
A credit spread sells premium with a safety net: capped risk, capped reward, and a bet that price stays on your side of the short strike.
Selling premium vs buying it
A credit spread is a valid, defined-risk way to sell premium — a different animal from buying a directional option outright, where the win rate is lower but the loss can never exceed what you paid. See credit and selling vs buying premium.
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NoVo is a software tool for market analysis, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.
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