When should I sell a stock or initiate a credit spread?

One way to know when a stock move in one direction is over, or at least pausing.

One way to avoid stepping in front of a freight train when selling credit spreads is shown below in TWTR. After a move up, if trading a daily chart, I look for two consecutive closes below the 20 period exponential moving average and a break of the previous swing low.

Then, selling call credit spreads as far above the market as you can, at strikes which still have premium (with a reasonable stop loss such as a break of the previous swing high) gives you a high probability of success.

You can see where this would have also worked in the other direction in mid-June to get you in on the upside, when price changes from making lower lows to making higher lows.

As always, keep a stop loss in mind and know when to get out if you are wrong. A stop can be resting in the market to be automatically triggered if trading the stock, or if trading options, make a note of where you need to get out or initiate other means of defending the trade, if feasible.