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 stock 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 earn money from stocks that stay relatively flat, but the tradeoff is your profit is capped and your losses could be larger. For example, you might sell a call option on TechCorp while buying a higher call option, pocketing $200 if the stock stays below your sold price at expiration.