A credit spread is two options of the same type and expiry. You sell one and buy a cheaper one further out of the money, so you're paid a credit up front. You keep all of it if the price stays on the right side of the strike you sold. If it doesn't, the option you bought caps the damage at the gap between the strikes minus the credit.
On 23 October 2026 QQQ closed at $704.40. Selling the 20 November 670/660 put spread paid $157. If QQQ is above $670 on 20 November you keep it all, and above $668.43 you still make money. The most it can lose is $843, if QQQ ends below $660.
$1.57 × 100 = $157
$670 − $1.57 = $668.43
($10 − $1.57) × 100 = $843
Both pay you up front and both have a loss with a limit. The difference is which way the price can't go.
Sell a put below the price and buy a lower put. It wins if the price rises, stays flat or falls a little, and loses money once it falls below the strike you sold by more than the credit.
Sell a call above the price and buy a higher call. It wins if the price falls, stays flat or rises a little, and loses money once it rises above the strike you sold by more than the credit.
Selling both on the same expiry is an iron condor. In bonds, "credit spread" means something else: the extra yield a corporate bond pays over a government bond, which our bond spread calculator works out.
The prices are real, from the 23 October close. Pick the put or the call spread, drag where QQQ might close on 20 November, or switch to two weeks before expiry to see what the spread would be worth if you closed it then.
The broker holds the $1,000 width; the $157 you receive covers part of it, so $843 of your own money is tied up. Filled at the midpoints the credit would have been $166.
The short call sits 5.1% above the price, about as far as the short put sits below it, with almost the same delta, and pays $50 more. Filled at the midpoints the credit would have been $214.50.
The two weeks line uses each option's implied volatility at the 23 October close and assumes it doesn't change. Time works slowly on the put spread at first: with QQQ unchanged it's up only about $39 after two weeks, a quarter of the credit, because the puts were priced for a choppy market. The calls were priced at a lower volatility, so the call spread decays faster: up about $97 by then. Either way the last two weeks carry most of the decay and the sharpest swings near the short strike.
Put credit spreads on the same 20 November expiry, all $10 wide, at five short strikes, priced at the 23 October bid and ask. The last two columns compare the win rate each one needs with how often QQQ actually stayed above its breakeven over 4 weeks.
| Short / long put | Wins neededto break even | Stayed abovelast 10 years |
|---|---|---|
| $690 / $680delta 0.36$250 credit · breakeven −2.4% | 75% | 80% |
| $680 / $670delta 0.30$201 credit · breakeven −3.7% | 80% | 85% |
| $670 / $660delta 0.24, the example$157 credit · breakeven −5.1% | 84% | 89% |
| $660 / $650delta 0.20$124 credit · breakeven −6.5% | 88% | 92% |
| $650 / $640delta 0.16$97 credit · breakeven −7.9% | 90% | 95% |
Wins needed is the share of trades you'd have to win if every loss were a full one: the most you can lose divided by the width. The example has to win more than 84 times in 100, since each full loss of $843 wipes out more than five $157 wins. Over the 10 years to September 2026, QQQ stayed above that breakeven in 89% of 4-week stretches; going back to 1999, which takes in the dot-com crash and 2008, it was 86%. Counting the partial wins and losses between the strikes, selling this spread at the 23 October price in every one of those stretches would have made about $60 a trade over 10 years, and about $26 since 1999. That's a thin edge, and one bad month uses up a lot of it. Call spreads work the same way above the price: the 740/750 call spread has to win more than 79 times in 100.
The short put stays at $670; only the put you buy moves. A wider spread collects more because the protection is cheaper, and it can lose far more.
| Width | Credit | Most you can lose | Return on risk |
|---|---|---|---|
| $5 widebuy the $665 put | $79 | $421 | 18.8% |
| $10 widethe examplebuy the $660 put | $157 | $843 | 18.6% |
| $20 widebuy the $650 put | $290 | $1,710 | 17.0% |
| $30 widebuy the $640 put | $391 | $2,609 | 15.0% |
| $50 widebuy the $620 put | $540 | $4,460 | 12.1% |
The breakeven hardly moves, and the return on what you risk falls as the spread widens, because the further put you buy is pricier for its distance. Pick the width from the loss you can live with on a bad month, then decide how many spreads to sell. Two $5 spreads collect $158 against $157 for one $10 spread with almost the same $842 at risk, though they mean four fills instead of two.
Put credit spreads with the short put near 0.24 delta and $10 wide at three expiries, at the 23 October bid and ask. Longer spreads pay about the same with more room, and earn less per day.
| Expiry | Credit | Per day |
|---|---|---|
| 20 Nov 2026monthly, the example670/660 | $157 | $5.61 |
| 4 Dec 2026weekly665/655 | $156 | $3.71 |
| 18 Dec 2026monthly660/650 | $162 | $2.89 |
Time decay speeds up near expiry, so the 28-day spread earns the most per day and also reacts hardest when QQQ moves. The December spreads give QQQ more room for about the same money, and more time for something to go wrong; over the last 10 years they lost slightly less often. That trade-off is why many traders open 30 to 45 days out and close well before the last week.
Every 28-day stretch of QQQ from March 1999 to October 2026, 6,930 of them, sorted by how much QQQ moved. The example spreads lose when QQQ moves about 5% the wrong way; the coloured bars are the stretches where that happened.
Hover or tap a bar. Price change only, without dividends; moves beyond 30% are in the end bars. Our calculations from QQQ's daily closes.
The market priced the two example spreads as roughly equal bets: both short strikes had a delta near 0.24. History wasn't even. Over the last 10 years QQQ rose more than 5% in 4 weeks about twice as often as it fell that far, so call credit spreads on a rising index lost far more often than put credit spreads. The losses also bunch together: in 2022 QQQ fell more than 4.9% in 42% of its 4-week stretches, and in 2000 to 2002 in over 40% each year. Put spreads look safest right up to the month they aren't, which is why the width, not the credit, should set your size.
You don't have to hold to the end, and many traders don't. Each card uses the QQQ put spread above.
Many traders buy the spread back once it has made half the credit or more. The rest would mean weeks more exposed to a fall, for less money.
If QQQ falls toward $670, you can buy the spread back and sell a lower spread on a later expiry. It only makes sense for a credit, or a small debit, and it adds time to a trade that's going against you.
QQQ options settle in shares. If QQQ ends between $660 and $670, only your short put is exercised and you start Monday owning 100 QQQ at $670, a $67,000 position on a spread that risked $843.
Early assignment is rare while an option still has time value, because the holder gets more by selling it. The exception is a short call that's in the money the day before QQQ goes ex-dividend, which happens each quarter; the last one was 21 September and the next comes in December, after this expiry. If a short leg is assigned, the option you bought still caps the loss on the price, though after an early call assignment you'd also owe the dividend on the short shares. Closing the spread is simpler.
A debit spread buys the more expensive option and sells the cheaper one, so you pay up front. Here are all four verticals on QQQ for 20 November, priced at the 23 October bid and ask.
| Spread | The trade | Paid or cost | Most you can make / lose | Makes money if QQQ ends |
|---|---|---|---|---|
| Put credit spreadbullish | Sell the 670 put, buy the 660 put | +$157 | $157 / $843 | Above $668.43, even if it falls 5% |
| Call debit spreadbullish | Buy the 700 call, sell the 710 call | −$616 | $384 / $616 | Above $706.16, so it needs a small rise |
| Call credit spreadbearish | Sell the 740 call, buy the 750 call | +$207 | $207 / $793 | Below $742.07, even if it rises 5% |
| Put debit spreadbearish | Buy the 710 put, sell the 700 put | −$419 | $581 / $419 | Below $705.81, so unchanged works too |
Neither kind is better. These credit spreads sit out of the money, so they win more often and pay less when they win; the debit spreads sit at the money and pay more, less often. With the same strikes the two are the same bet: a 660/670 call debit spread has exactly the payoff of the 670/660 put credit spread. At the midpoints they priced within a few cents of each other, but at the bid and ask the call spread cost $927 for at most $73 back, $84 worse than selling the put spread, because deep in-the-money calls trade with much wider quotes. Sell the side whose options are out of the money.
Three ways to collect premium on the same QQQ expiry, priced at the 23 October close.
| Strategy | The trade | Paid | Money held | Most you can lose | Makes money if QQQ ends |
|---|---|---|---|---|---|
| Cash-secured put | Sell the 670 put with $67,000 set aside | +$844 | $67,000 | $66,156 if QQQ went to zero | Above $661.56; below $670 you own the shares |
| Put credit spread | Sell the 670 put, buy the 660 put | +$157 | $1,000 | $843 | Above $668.43 |
| Iron condor | Both example spreads: 670/660 puts and 740/750 calls | +$364 | $1,000 | $636 | Between $666.36 and $743.64 |
The $660 put costs $687 of the $844, and it cuts the worst case from $66,156 to $843 while freeing $66,000 of cash. A cash-secured put suits someone happy to own QQQ at $670. A credit spread suits a view on the price without buying it, and the iron condor adds the call side because QQQ can't end below $660 and above $750 at once, so the margin stays at $1,000. Price any of them with your own strikes in the options payoff calculator.
Brokers ask for a higher options approval level for spreads than for covered calls or cash-secured puts, and usually a margin account. What you trade on also changes how it settles and, in the US, how it's taxed under IRS Publication 550.
| Underlying | Exercise and settlement | Margin on a credit spread | US tax on the result |
|---|---|---|---|
QQQETF options | American-style, can be exercised any day; settles in shares | The width × 100: $1,000 for a $10 spread, less the credit you keep | Capital gain or loss, short-term when held a year or less |
NDXNasdaq-100 index options | European-style, exercised only at expiry; settles in cash | The same rule, on a contract many times larger than one QQQ option | Section 1256: 60% long-term, 40% short-term, marked to market at year end |
| A single stock | American-style; settles in shares | The width × 100, less the credit | As QQQ; earnings can jump a stock past both strikes overnight |
For the option you sold, the gain or loss is short-term, booked when it expires or you buy it back. The option you bought is short-term too unless held over a year, and the straddle rules can delay when that clock starts. If a leg is assigned, its premium moves into the cost or sale price of the shares instead.
Broad-based index options are Section 1256 contracts, reported on Form 6781. Any gain or loss counts as 60% long-term and 40% short-term however briefly you held it, and open positions are valued as if sold on the last business day of the year.
The two legs offset each other, so the straddle rules can apply: closing one leg at a loss while the other shows a gain can defer the loss. Other countries have their own rules.
A spread that keeps its credit 80 times in 100 can still lose money, because one full loss is more than five wins. Compare how often you win with how often you need to.
The last days bring the biggest swings in value near the short strike. A close between the strikes also hands you 100 shares, or a short position, on Monday.
Earnings for a stock, or a Fed decision or inflation report for an index fund, can move the price past both strikes in a day. The extra premium before an event is the market pricing that move.
Over the last 10 years QQQ rose more than 5% in 4 weeks about twice as often as it fell that far. A call credit spread on a growth index is a bet against its trend.
Ten spreads that pay $1,570 risk $8,430. Size each trade from the most you can lose, and don't add spreads to win back a loss.
A credit spread is two positions that only make sense together. AllInvestView prices the trade before you place it and keeps the legs together once it's open, across every broker you use.
Open legs on the same underlying and expiry are grouped as one put or call credit spread, with the most it can make and lose, the breakeven, how much of the credit you've kept and the payoff at expiry.
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Spreads, condors, shares, ETFs, bonds and dividends on one dashboard, synced from your brokers or imported from a file, with the premium you've kept each month.
It's two options of the same type and expiry on the same stock or ETF. You sell one and buy a cheaper one further out of the money, so you're paid up front. You keep the whole credit if the price stays on the right side of the strike you sold, and the option you bought caps what you can lose if it doesn't.
You can make the credit and lose the gap between the strikes minus the credit. Selling QQQ's 20 November 670/660 put spread paid $157 on 23 October 2026, with QQQ at $704.40. It keeps the $157 if QQQ ends above $670, makes money above $668.43, and loses at most $843 if QQQ ends below $660.
A put credit spread, or bull put spread, sells a put below the price and wins if the price doesn't fall far. A call credit spread, or bear call spread, sells a call above the price and wins if it doesn't rise far. On QQQ on 23 October 2026, the 670/660 put spread paid $157 and the 740/750 call spread paid $207.
Neither is better. An out-of-the-money credit spread wins more often and earns less when it wins; an at-the-money debit spread wins less often and earns more. On QQQ's 20 November options, the 670/660 put credit spread paid $157 to risk $843, while the 700/710 call debit spread cost $616 to make up to $384.
If the price ends above the short put of a put spread, or below the short call of a call spread, both options expire worthless and you keep the credit. If it's past the strike you bought, you lose the full width less the credit. If it ends between the two, only your short option is exercised: on QQQ that means 100 shares bought or sold at the short strike, so most traders close before the last day.
Usually. Brokers ask for a higher options approval level for spreads than for covered calls or cash-secured puts, and for QQQ or stock spreads a margin account. The margin held is the width of the spread times 100, $1,000 for a $10 QQQ spread, and the credit you receive covers part of it.
On QQQ and other ETF or stock options, a spread that expires or is closed within a year gives a short-term capital gain or loss. On NDX, SPX and other broad index options it counts as Section 1256 contracts: 60% long-term and 40% short-term whatever the holding period, marked to market at year end on Form 6781.
Checked on 25 October 2026.
Credits use the bid for options sold and the ask for options bought, before commissions. Deltas and the 14-days-left line come from AllInvestView's Black-Scholes engine with a 3.94% rate and each option's implied volatility solved from its midpoint price. The 4-week figures are our calculations from QQQ's closing prices: each stretch starts on a trading day and ends on the last close on or before 28 days later, the last one starting on 25 September 2026.