Bearish Debit Spread or Credit Spread?
If you are bearish and want to trade an option spread strategy, implied volatility is the main factor when deciding between bearish put debit spreads and bearish call credit spreads.
Kirk Du Plessis
Apr 19, 2021
Choosing between using a debit spread or credit spread for a bearish stock setup requires that we first take a look at where implied volatility is trading. If IV is high then we want to be a net seller of options and would opt for selling a call credit spread above the market. If IV is low then we want to be a net buyer of options and would alternatively opt for buying an ATM put debit spread.
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