I've increasingly found myself favouring longer-dated credit spreads, mainly because they allow me to place the short strike considerably further from the underlying while still collecting a worthwhile premium.
For example, rather than selling a shorter-dated spread relatively close to the market, I'd generally prefer to go further out in time and collect a similar credit from a strike that gives the position substantially more room.
Obviously, there's a trade-off. The position remains open for longer, theta decay is slower, and you're exposed to changes in volatility and market fundamentals for a greater period of time. But for me, the additional distance from the short strike is worth that trade-off. I'd rather give the underlying more room to move than rely on faster decay with a strike closer to the market.
For those who have sold credit spreads consistently over several years, where have you ended up on this trade-off?
Do you favour **more time and more distance**, or **shorter duration and faster decay**, assuming you can collect broadly similar premium?
I'm particularly interested in whether your preference has changed as you've gained more experience.