In the video by Options with Davis, they discuss 3 great stocks for trading credit spreads. They are offering the Options Income Blueprint for free to help traders make informed decisions. The video suggests using these 3 proven stocks to trade credit spreads profitably. Viewers can also find other videos on the channel that cover related topics of interest such as generating income with credit spreads, iron condors, and the wheel strategy.
The first stock mentioned is Google, which is a good stock for trading bull put spreads due to its liquidity, tight bid and ask spread, decent volatility, and fundamentally strong factors. Meta (Facebook) is another good stock for trading bull put spreads, with good liquidity and volatility. The video provides steps for entering a bull put spread, including using a stochastic oscillator, identifying support levels, waiting for the price to come down and the oscillator to be oversold, and placing the spread below the support level. Adjustments can be made if the premium is not sufficient or if the price has already breached the support level. Overall, these 3 stocks offer great opportunities for trading credit spreads profitably.
Introduction
In this article, we will discuss the three best stocks for trading credit spreads, specifically focusing on the bull put spread strategy. We will cover the reasons why these stocks are good choices for credit spreads, their liquidity, volatility, and fundamental strength. Additionally, we will provide step-by-step instructions on how to enter a bull put spread trade using technical indicators like the stochastic oscillator and identifying support levels.
Options with Davis
Options with Davis is a YouTube channel that provides valuable information and insights on options trading strategies. One of the videos on the channel discusses three great stocks for trading credit spreads, which we will cover in this article. The channel aims to help traders make informed decisions by offering free resources like “The Options Income Blueprint,” which serves as a guide to generating income through options trading.
The Options Income Blueprint
“The Options Income Blueprint” is a free resource offered by Options with Davis that provides traders with a comprehensive blueprint for generating income through options trading. It covers various strategies like credit spreads, iron condors, and the wheel strategy. By following the blueprint, traders can gain a better understanding of the options market and make more profitable trades.
Using 3 Proven Stocks for Credit Spreads
The video by Options with Davis highlights three proven stocks that are ideal for trading credit spreads. These stocks have been carefully selected based on their liquidity, volatility, and fundamental strength. By using these stocks for credit spreads, traders can increase their chances of success and generate consistent income.
Related Videos on the Channel
In addition to the video discussing the three best stocks for credit spreads, Options with Davis offers other videos on the channel that cover related topics of interest. These videos include tutorials on generating income with credit spreads, the iron condor strategy, and the wheel strategy. By watching these videos, traders can further enhance their options trading knowledge and improve their trading strategies.
Generating Income with Credit Spreads, Iron Condors, and the Wheel Strategy
Options with Davis emphasizes the importance of generating income through options trading. The channel discusses various strategies like credit spreads, iron condors, and the wheel strategy that can help traders achieve this goal. By effectively implementing these strategies, traders can create a consistent source of income and improve their overall trading performance.
Focusing on the Bull Put Spread
For the purpose of this article, we will focus on the bull put spread strategy for trading credit spreads. The bull put spread strategy involves selling a put option with a higher strike price and simultaneously buying a put option with a lower strike price. This strategy allows traders to profit from a moderately bullish market outlook. Options with Davis recommends this strategy because it aligns with their preference for trading more towards the bullish side.
Google – A Good Stock for Bull Put Spreads
One of the three stocks recommended by Options with Davis for trading bull put spreads is Google. Google, with the ticker symbol GOOG, is a technology stock known for its liquidity, tight bid and ask spread, decent volatility, and fundamental strength. These factors make Google a favorable choice for traders looking to trade credit spreads profitably.
Meta (Facebook) – Another Good Stock for Bull Put Spreads
Meta, formerly known as Facebook, is another stock recommended by Options with Davis for trading bull put spreads. Meta is a widely traded stock with good liquidity and volatility, making it suitable for credit spread trading. Additionally, Meta is considered a fundamentally strong stock with increasing revenue and net income. These positive fundamentals make it an attractive option for traders looking to generate income through options trading.
Steps to Enter a Bull Put Spread
To enter a bull put spread on stocks like Google or Meta, Options with Davis suggests a few simple steps. First, add a stochastic oscillator to track market conditions and determine if a stock is oversold. This helps identify potential entry points for the bull put spread. Secondly, identify the nearest support level for the stock to determine the strike prices for the put options. The support level acts as a price level where the stock has historically bounced back from. Lastly, place the bull put spread below the identified support level.
Adjustments for Credit Spreads
Options with Davis acknowledges the need for adjustments in credit spreads if certain conditions are not met. For example, if the premium for the bull put spread is not sufficient, traders may consider adjusting the strike prices or selecting a different stock. Additionally, if the price has already breached the support level, traders may need to reassess their trade and consider alternative strategies. Adjustments should be made based on market conditions and individual risk tolerance.
Trading Options with Higher Volatility
Options with Davis recognizes that trading options with higher volatility can lead to better premiums and structures. However, it is important to note that higher volatility also implies higher risk. Traders should carefully assess their risk tolerance and market conditions before engaging in options trades with high volatility stocks. Proper risk management and position sizing are essential for successful options trading.
Conclusion
In conclusion, Options with Davis provides valuable insights and resources for traders looking to generate income through options trading. The three recommended stocks for trading credit spreads, Google and Meta, offer liquidity, volatility, and fundamental strength. By following the suggested steps for entering a bull put spread, traders can increase their chances of success. Additionally, the channel’s focus on generating income with credit spreads, iron condors, and the wheel strategy provides traders with a comprehensive toolkit for options trading.