This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (April 2014) ( Learn how and when to remove this template message)Options spreads are the basic building blocks of many options trading strategies. A spread position is entered by put call option spread tools and selling equal number of options of the same class on the same underlying security but with different strike prices or expiration dates.The three main classes of spreads are the horizontal spread, the vertical spread and the diagonal spread.
They are grouped by the relationships between the strike price and expiration dates of the options involved.Vertical spreads, or money spreads, are spreads involving options of the same underlying security, same expiration month, but at different strike prices.Horizontal, calendar spreThis article needs additional citations for verification.
Please include your IP address in your email. Conversely, a put option loses its value as the underlying stock increases and the time to expiration approaches. DescriptionA bull put spread involves being short a put option and long another put option with the same expiration but with a lower strike. DescriptionA bull call spread is a type of vertical spread.
It contains two calls with the same expiration but different strikes. The strike price of the short call is higher than the strike of the long call, which means this strategy will always require an initial outlay (debit).
Put call option spread tools