Credit Spread

A credit spread is an options strategy where you sell an option (collecting money upfront) and buy a different option to protect yourself, betting that the price won't move much. You keep the difference between what you collect and what you pay as profit—if you're right. You'll encounter this when exploring income-generating strategies beyond just buying stocks. It matters because it lets you profit from stable prices rather than big moves, though your maximum profit is capped. For example, you might sell a call option on TechCorp at $150 and buy one at $155, pocketing $2 per share if the stock stays below $150 at expiration. The tradeoff: limited upside, but defined risk.