Short Bear Call Spread Entry Criteria: General Options Strategy & VIX Term Structure

An important theme in options selling strategy is to buy intrinsic value and sell extrinsic value. I’ve been thinking of how this relates to the entry points for short Bear call spreads in general and my current strategy as applied to the underlying $VXX in particular.
(Note: In this particular example for simplicity, I’m assuming extrinsic value is only composed of time value, even though extrinsic value is also composed of implied volatility and interest rates. I’m assuming negligible volatility skew between strike prices & interest rates are negligible to calculation.)

The question is which is better?
– Larger credit from a (deeper) in the money Bear credit spread?
– Smaller credit from a (further) out of the money Bear credit spread?

Assuming that the underlying is currently trading at S, there are four base cases for short Bear call spreads of Y/Z where Y and Z are the short and long call strike prices, respectively.

1. In the money: Y < Z < S
The most premium, lowest probability of success, and highest risk.

2. Underlying at Long Strike Price: Y < Z = S
The underlying is trading at the long call strike price.
– Long more Time Value than Delta
– Short more Delta than Time Value