Spread

Q: Spread

A spread is a type of options strategy in which the trader simultaneously buys and writes different options of the same type (call or put) on the same underlying asset, but with different strike prices and/or expiration dates. Not to be confused with the bid ask spread . The term spread by itself is quite vague. A spread can be opened via a credit or a debit. In other words: some spreads require a debit to open (a debit spread), whereas other spreads may provide the trader with a credit (a credit spread). A spread that is built using only calls is referred to as a call spread. Similarly a spread that is constructed using puts is referred to as a put spread. We previously mentioned that the term spread by itself is vague. We can further describe a spread as being a call credit spread , or a put debit spread . A call credit spread, which is a directionally bearish trade, is often referred to as a bear call spread. A call debit spread, a directionally bullish trade, is referred to as a bull call spread. As a spread requires two different contracts to execute it can be classified as a multi-leg trade . Spread Resources: Unusual Whales Options Strategies Breakdown

Question

Spread

Accepted Answer

A spread is a type of options strategy in which the trader simultaneously buys and writes different options of the same type (call or put) on the same underlying asset, but with different strike prices and/or expiration dates. Not to be confused with the bid ask spread.

The term spread by itself is quite vague. A spread can be opened via a credit or a debit. In other words: some spreads require a debit to open (a debit spread), whereas other spreads may provide the trader with a credit (a credit spread).

A spread that is built using only calls is referred to as a call spread. Similarly a spread that is constructed using puts is referred to as a put spread.

We previously mentioned that the term spread by itself is vague. We can further describe a spread as being a call credit spread, or a put debit spread. A call credit spread, which is a directionally bearish trade, is often referred to as a bear call spread. A call debit spread, a directionally bullish trade, is referred to as a bull call spread.

As a spread requires two different contracts to execute it can be classified as a multi-leg trade.

Spread Resources:
Unusual Whales Options Strategies Breakdown