Trading vertical credit spreads is a popular options trading strategy used by traders to generate income by selling options contracts. This strategy involves selling a lower strike price option contract and buying a higher strike price option contract of the same underlying asset. The difference in premium received from selling the lower strike price option and the premium paid for buying the higher strike price option is the net credit received by the trader. In this article, we will discuss the stocks and ETFs that pay the most premium when trading vertical credit spreads.

Stocks/ETFs With The Highest Credit Spreads Premiums

1. Tesla (TSLA) – Tesla is a popular stock that has high implied volatility, making it an attractive option for trading vertical credit spreads. Tesla has a high stock price which means that the distance between the two strike prices can be wider. A wider spread means higher premium.
2. Amazon (AMZN) – Amazon is another popular stock that has high implied volatility, making it an ideal option for trading vertical credit spreads. Amazon also has a high stock price which means that the distance between the two strike prices can be wider. A wider spread means higher premium.
3. SPDR S&P 500 ETF Trust (SPY) – SPY is an ETF that tracks the S&P 500 index and has high implied volatility, making it an attractive option for trading vertical credit spreads. Additionally, SPY has a high trading volume, which means that there is a high demand for options contracts, resulting in higher premium received.
4. Invesco QQQ Trust (QQQ) – QQQ is an ETF that tracks the Nasdaq 100 index and has high implied volatility, making it an ideal option for trading vertical credit spreads. QQQ also has a high trading volume, which means that there is a high demand for options contracts, resulting in higher premium received.
5. Alphabet (GOOGL) – Alphabet, the parent company of Google, is another popular stock that has high implied volatility, making it an attractive option for trading vertical credit spreads. Additionally, Alphabet has a high stock price, which means that the distance between the two strike prices can be wider, resulting in higher premium received.

My Personal Favorite ETFs With High Premium

1. SPDR S&P 500 ETF Trust (SPY) – This is a highly liquid ETF that offers great trading opportunities every day. This ETF is also directly related to VIX, so as VIX increases, you can typically collect more premium.
2. SPDR Dow Jones Industrial Average ETF Trust (DIA) – This is another liquid ETF that offers great trading opportunities. This ETF is also priced higher which allows you to increase the spread width and collect more premium.

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In conclusion, when trading vertical credit spreads, it is essential to select stocks and ETFs that have high implied volatility and a high trading volume to receive the maximum premium. Tesla, Amazon, SPY, QQQ, and Alphabet are some of the stocks and ETFs that pay the most premium when trading vertical credit spreads. However, it is crucial to conduct thorough research and analysis before executing any options trading strategy.

Thanks for reading 🙂
Austin Bouley
Founder & CEO