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Net Credit

A net credit occurs when the total premium received from the legs of an options strategy exceeds the premium paid. Example Sell option: $6 Buy option: $2 Net credit: $4 With a 100 share multiplier: $400 before fees.

Why it matters to you

A net credit is the premium received when opening a credit strategy. It is not automatically profit. The strategy still carries risk and its final result depends on what happens after entry.