Options spread are combinations which can be formed by taking atleast two or more positions in various options. A Call Spread is the net combination position in options which we get when the two or more call option positions are taken by a trader. A Put Spread is the net combination position in options which we get when the two or more PUT option positions are taken by a trader. And that is the benefit of trading in options spread - you have low risk, low return strategy.


However, in a spread position, you will have limited exposure, and limited profit potential. Another benefit is that the cost of getting into a spread is less compared to cost of trading in naked call or put trades. Since only call options are taken, hence the name CALL OPTION SPREAD or simply CALL SPREAD. Basically, the net position which you receive in an options spread position has limited scope of profit and limited scope of loss - that makes up the spread.


Hence, you pay something for buying one option position and receive something from selling another option position.



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Comments

  1. Smack_That

    Options trading system won't work on to resolve the trading conflict that long time.

    20.10.2013

  2. GULESCI_QAQASH

    Dealer might have some of these uses the Martingale method has been lately.

    20.10.2013