A favorite directionless investment method with option sellers is called the vertical spread or the credit spread. One reason it’s so well-liked is because it’s one of the easiest option strategies to understand. Another explanation for it’s attractiveness is that once the trade is placed there can be very little attention needed to supervise it - allowing the credit spread trader to go out and spend their time doing other things rather than sitting in a dark room staring at a trading screen all day long.

The credit spread trade is a basic building block of many if not most other more complex option trading strategies such as the iron condor spread, the butterfly, and the double diagonal trade. For example, the butterfly is created using one credit spread and one debit spread, while the iron condor is made up from two credit spreads, one on either side of where the underlying is currently trading at.

Option traders love to trade this strategy because the way these trades are constructed can allow…