How to Structure Wide vs. Narrow Credit Spreads — And When to Use Each

by Chris Pulver | Aug 8, 2025

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We start the week looking at the market from the top down. I’ll walk through the major indexes, economic themes, currencies and internals like advanced-decline lines and breadth. The goal is to set expectations for the week ahead and identify directional bias before the real trading action begins.

Credit spreads come down to two things — where I sell the short strike and how wide I set the wings. I use volatility to set the day’s range, sell premium where price is unlikely to go, and pick the width based on how many dollars I’m willing to risk.

Width Is About Risk

A 10-wide versus 5-wide spread changes my max loss and the credit I collect. The probability comes from selling far out of the money, not from the width.

If I sell the SPX 6,420 call and buy the 6,430 call, that’s a 10-wide bear call spread.

Collecting about $1 credit means $9 risk per contract. It’s a higher-probability trade because price is well below 6,420, and the chance of hitting that level is pretty slim.

On the put side, selling the 6,275 put and buying lower creates another 10-wide spread. Doing both sides could bring in $2 total credit while risking $9 on each side.

Sometimes that much risk doesn’t sit well, but the probability is still tied to the strike distance.

At the money, the numbers shift…

A 5-wide bear call like 6,350/6,355 can collect about $2 credit, leaving $3 risk. The formula is the same in every example — spread width minus credit equals risk.

Wider wings usually mean smaller credit and larger max loss. Narrow wings reduce dollar risk but often require me to work closer to price to get paid.

Let Price Come to You

Credit improves as a trade moves toward being at the money. I set my levels and wait. Placing a limit order lets price travel to my strikes. If price pushes toward 6,420–6,430, that far-OTM bear call can become at the money and fill closer to $5 or $6 credit.

I keep it simple. I use VIX to set a modified top and bottom for the day. I sell premium at those edges and choose 5-wide, 10-wide or 20-wide based on the dollars I want to risk — not to create probability.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.

P.S. Daily Profit Plan: Your Weekly Wake-Up Call to Market Moves

Welcome to Macro Monday, your go-to briefing to tune into the market flows that actually matter right now. As we head into the week, it’s crucial to cut through the noise and zero in on what’s driving price action and where the best opportunities lie.

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Here’s the sharp, trader-focused rundown for Monday:

Big Picture and Weekly Outlook: I’ll break down the key market drivers shaping the week ahead. Where the flows are lining up, where they’re breaking down, and what that means for your trades.
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