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When to Sell A Vertical Spread Option

In options trading, selling a vertical spread option is best suited for circumstances when you want to and can put time decay and volatility to work in your favor avoiding the unlimited risk of selling naked options. Generally speaking, you can sell a vertical option when:

  • The implied volatility is higher than average

  • You have the opportunity to sell an option as far out of the money as possible while receiving enough premium to make the trade worth making

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