When to Close Credit Spread Trades For Profits.
A credit spread is the difference between Treasury securities and non-Treasury securities, as well as a type of options strategy. In finance, a credit spread, or net credit spread is an options strategy that involves a purchase of one option and a sale of another option in the same class and expiration but different strike prices. It is designed to make a profit when the spreads between the two options narrows.
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So in some cases, it makes sense to close out a credit spread trade at a profit, just to free up that cash for another opportunity.
Most of the time, I allow my credit spread trades to expire. Investors receive a net credit for entering the position, and want the spreads to narrow or expire for profit.