Credit spreads are a popular options trading strategy that involves selling options with a higher strike price and buying options with a lower strike price, resulting in a net credit (premium) received. This strategy is a versatile and widely used technique in options trading.

Here's a breakdown of the credit spread strategy:

*Sell:*

- A call option with a higher strike price (above the current market price)

- A put option with a higher strike price (above the current market price)

*Buy:*

- A call option with a lower strike price (below the current market price)

- A put option with a lower strike price (below the current market price)

By selling the higher strike price options and buying the lower strike price options, you collect a net credit (premium) from the buyer of the options. This premium is the maximum profit you can make from the trade.

The credit spread strategy is a neutral strategy, meaning it doesn't rely on the price of the underlying asset moving in a specific direction. Instead, it profits from the premiums collected and the time decay of the options.

*Key benefits:*

- Collects premiums from the sold options

- Limits potential losses with the bought options

- Can be used to generate income or speculate on price movements

*Key risks:*

- Limited potential profit (premium received)

- Potential losses if the price of the underlying asset moves significantly

- Time decay can work against the trader if the options expire worthless

Overall, credit spreads are a popular strategy for options traders who understand the risks and rewards of options trading.