Put credit spread

Checked October 2026

A put credit spread sells a put and buys a further put, so the credit is kept if the market stays above the short strike and the loss stops at the long strike. Option Alpha's SPY test sells the 30-delta put, buys the 10-delta put, and enters about 30 days out. Backtoast ran it. The managed version failed our test, losing 2.3% a year over 283 trades.

Backtoast

You pay $99 for two full tests of your own strategy, and a pass is an offer of 30% of the profit Backtoast makes trading it with its own money.

Put credit spread

It's a bet that SPY doesn't fall much in the next month, so it makes money if SPY rises or sits still. The 30-delta short put is only a couple of percent under the market, so an ordinary dip puts it in the money.

The run used Option Alpha's managed version, which takes profit at half the credit, stops out when the loss reaches a quarter of the credit, and closes anything still open 15 days before expiry. Option Alpha doesn't say what the 25% stop is measured against, so the run read it as 25% of the credit.

Selling the put alone, with the cash to cover it, is a cash secured put strategy, and adding a call spread above the market makes it an iron condor strategy.

When it works

A put credit spread does best in flat or rising markets, when implied volatility on puts runs above realized and SPY stays above the short strike. Traders use it to sell put premium with a capped loss and far less capital than a cash-secured put, and it turned positive in the last six months of our run, at +1.29% a trade against −0.69% before. A wider stop and a short strike further below the market are the variants worth trying, and a draft can test either before you spend a full test.

Origins

Du Plessis, Henry and Hysmith published the test on Option Alpha in 2021 and updated it in 2024, a five-year practitioner backtest on SPY rather than a journal paper. Held to expiry, their spread won 93% of 133 trades, and the managed version made $1.26 for every $1 it lost over 295 trades. The run used SPY from late 2021 to the end of 2025.

The run is Backtoast's, from 29 October 2026, after costs.