How to Build a Defined Risk Credit Spread on a Small Account

In this tastylive collaboration with Cboe, the host flips the usual beginner question on its head: do not start with how much a trade can make, start with how much it can lose in dollars, before you place it. He then builds a bullish to neutral put credit spread step by step, covering how the strikes, the credit, the breakeven and the maximum profit and loss all fit together in a defined risk trade. To keep it sized for a smaller account, he uses XSP, the mini index that tracks one tenth of SPX, so the notional and the buying power are far more manageable than trading full size. The exact strikes and prices will change day to day, but the process he walks through does not. Education, not a recommendation. 📊 tastylive: https://www.tastylive.com/ 📰 Get Tom's pre-market analysis every morning: https://www.tastylive.com/newsletters 📘 FREE Options Strategy Guide: https://tinyurl.com/bp9ms763 📱 Follow tastylive on X: https://x.com/tastyliveshow Chapters 00:00 Start with what you can lose 00:37 Why XSP fits a small account 02:00 Notional vs buying power 03:30 Choosing the strikes and credit 05:30 Breakeven, max profit and max loss 07:30 Building the live trade 09:30 Managing the position 11:00 The process that repeats #tastylive #xsp #putcreditspread #definedrisk #smallaccount #optionsforbeginners #cboe #optionstrading #tastytrade #optionseducation tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we'll help you take your trading to the next level, whether you are new to trading or a seasoned veteran. tastylive content is created, produced, and provided solely by tastylive, Inc. ("tastylive") and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange Traded Options Risk Disclosure Statement found at https://tastytrade.com/disclosures/. Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims, including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.