What's The Difference Between The $1 Wide Vs $2 Wide
If you are trying to decide between a $1 wide and a $2 wide credit spread, then this is the article for you because I will be covering the unique advantages and disadvantages of each.
$1 Wide Credit Spread
- Account Size: $2,000 - $30,000 recommended
- Unique Advantage: It has a higher credit collection percentage which means a higher long term return compared to the $2 wide.
- Potential Downside: As you size up, you can easily trade 100 $1 wide spreads and start running into liquidity and execution issues.
$2 Wide Credit Spread
- Account Size: $20,000+ recommended
- Unique Advantage: It cuts your commissions costs in half because a $2 wide spread requires half the trade size that $1 wides required in order to generate the same return.
- Potential Downside: You will have a lower long term return compared to the $1 wide since your credit collection percentage drops the wider your spread is.
At the end of the day, the choice is yours and should be based on your own risk tolerance level. If you have any questions or need help, please contact me via email@example.com.