Over the weekend I took a look at some securities that I would like to do some credit spreads on. This is a trade strategy where you sell an option that is near the money while you buy an option that is further out of the money. You get to collect the difference when the options expire.

This is a good strategy to use during the week options expire (which is always the third Friday of the month) because you don't have to wait long for the trade to complete and you get to keep the credit. The risk is that the underlying stock for the option you buy will go "into the money" which could put you on the hook for the option if it gets exercised.

So the trick is to find a stock that is not likely to change direction between the time you execute the trades and the time they expire. Normally this is relatively straightforward, but with the world banks and governments involved in resolving the global credit crises, you can't be confident in many of the trends we're seeing.

Most stocks are heading upwards today, but I want to see what happens over the next day or so before committing to anything.

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