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This video demonstrates how to sell a credit put spread. Put Credit Spreads are sold to open and bought to close. When selling to open an option contract, the max profit of the trade is received upfront, collateral in the form of cash is required to be held by your broker for the duration of the trade. This collateral is used to cover any losses that will occur if the underlying stock drops below the short leg of the spread at expiration.
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Disclaimer: This is educational information.
All Trades have risk that should be considered before entering any trade. Options carry significantly more risk than stocks.
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