Credit Spread Cheat Sheet: Setup, Management & Exit Rules
The complete credit spread playbook condensed to one page: entry criteria, strike selection, credit targets, the 50% exit, stop-loss and roll rules for put and call credit spreads.
Credit Spread Cheat Sheet
A quick-reference card for trading credit spreads: sell an out-of-the-money option, buy a further option as the wing, collect a credit of at least one-third of the wing width, exit at 50% of max profit, and cap losses with a stop or a roll before they reach max loss.
Print it, pin it, and stop second-guessing entries and exits at the trade desk.
30-45 DTE. Short strike at 16-25 delta. Credit at least one-third of the wing width. Exit at 50% of max profit. Cap losses at 1.5-2x the credit. Avoid earnings inside the cycle. Put credit spreads in uptrends, call credit spreads in downtrends.
A credit spread sells a nearer strike and buys a further one for a net credit; maximum profit is the credit and maximum loss is the width minus the credit.
Entry Checklist
- ✅ IV rank above 30 — premium selling needs rich premium (check the IV calculator)
- ✅ 30-45 DTE — the theta/gamma sweet spot
- ✅ No earnings before expiration — binary events break the math
- ✅ Short strike at 16-25 delta on the side you are selling
- ✅ Credit at least one-third of wing width — $5 wings need $1.65+
- ✅ Direction with the trend — put credit spreads in uptrends, call credit spreads in downtrends
The Numbers Table
| Parameter | Standard | Aggressive | Conservative |
|---|---|---|---|
| DTE at entry | 30-45 | 21-30 | 45-60 |
| Short strike delta | 16-20Δ | 25-30Δ | 10-16Δ |
| Credit / width | 1/3 | 1/2 | 1/4 |
| Profit target | 50% | 25-35% | 65-75% |
| Loss limit | 1.5-2x credit | 2x credit | 1x credit |
Win-rate context by delta comes from our credit spread backtest (illustrative).
Management Triggers
50% of max profit: close and redeploy. The single highest-impact rule — it captures most of the theta and sidesteps end-of-cycle gamma risk.
Loss hits 1.5-2x credit: close. The win-rate math only works if losers stay capped well below max loss.
Short strike tested, time remaining: roll out one cycle for a net credit. Never roll for a debit.
Trend flips: rotate between put and call credit spreads rather than fighting a directional headwind.
Run the numbers before you trade
Max profit, max loss & breakeven for put/call credit spreads.
Or model any multi-leg trade in the options profit calculator — payoff chart, breakeven & Greeks.
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