Alligator Spread

Alligator Spread

A term referring to an unprofitable spread regardless of favorable market movements. This loss is due entirely to large commissions charged upon the transactions.

Notes:

Don't get caught in an alligator spread! This type of scenario will lead to a losing position even if you predict the market correctly.

See also: Broker, Commission, Market, Option, Spread

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Alligator spread

The term used to describe a spread in the options market that generates such a large commission that the client is unlikely to make a profit even if the markets move as the investor anticipated.