I’m confused by what we mean when with option call or put spread, we have a debit balance or a credit balance?
Like in what situation would we want to have either one?
A debit spread requires that you pay cash to establish it, such as a bull call spread, a bear put spread, a long straddle, or a long strangle. The payoff on a debit spread will be zero or positive.
A credit spread generates cash when you establish it, such as a bull put spread, a bear call spread, a short straddle, or a short strangle. The payoff on a credit spread is zero or negative.
There’s not much reason to choose between, say, a (debit) bull call spread and a (credit) bull put spread, or between a (debit) bear put spread and a (credit) bear call spread. Your profit will be the same either way (lest there be an arbitrage opportunity).