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R Multiple for Credit Spreads

Stock Market Options Trading

CHAPTER

Credit Spreads - What Is It?

A credit spread is the act of selling one put and then buying another put a little bit lower for a net credit. The second put is really a protective measure so that you can define your risk. You're ultimatly going to divide your gain divided by your risk. This, this episode really isn't about picking strikes and using stop losses. We really just want to talk about how to cover your r multiple for whatever trade you do.

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