Everything You Wanted to Know About Equity Options but Were Too Frightened to Ask.
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The Difference Between Credit Spreads and Debit Spreads
Credit spreads incur the liability of being short an option that is closer to at the money than the option you're long. Those options that are closer tot the money have a higher likelihood of becoming in the money, thus their higher delta and gamma. Debit spreads are your buying an option that's usually bigger than the optionYou're selling. You end up paying for that right, much like the other person who sells it to you actually gets credited that amount of premium but they incur the obligation to deliver or take delivery of the stock when you decide to inevitably exercise or or it expires worthless.
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