Backspread

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Backspread

An investment strategy in which an investor sells one or more option contracts and uses the proceeds to buy more option contracts than he/she sold. The options have the same underlying security or asset, and, ideally, the investor uses the premium(s) from the option(s) sold to finance the premiums for the options bought. If the underlying moves in the direction the trader wants, he/she can realize exceptional profits; however, even if the underlying moves away from the trader, he/she can make a small profit or at least break even because risk is limited to the premiums of the calls bought, which hopefully do not exceed the premium(s) of the option(s) sold. A backspread strategy may be used for calls or puts, but not both. See also: Put Ratio Backspread, Call Ratio Backspread.
References in periodicals archive ?
Spring Alive began as a European project to create a real-time online map of the northward and back spread of these spring migrants.
Punters paying upwards of PS15 appeared far from impressed, as chuntering at the back spread like wildfire as the show progressed.
It is high time that this spirit of fighting back spread throughout the country.
When I walked it this morning I thought it was good, but they've been coming back spread out like three- mile chasers so it must be riding softer than that.
Then he moved backward so that his hard-shelled back spread the branches even more.
Indeed, a production of BFG - that's the Big Friendly Giant to those in the know - at Sutton Coldfield's Highbury Little Theatre some years back spread panic in the ranks of an audience composed almost entirely of Brownies.
The back spread of the catalog is devoted to more than three dozen fabric choices, although the catalog shoppers are invited to "visit your local participating Calico Corners.
Life companies displayed discipline during the first half of 2006 as spreads on credits typically purchased to back spread lending programs remained tight relative to funding costs.
Each percentage point clawed back spreads the direct and indirect costs of production further, so increasing the margin per unit.
She pulls up her top to show me a silver bar through her newly- pierced navel -``something I always dreamed about doing'' -and across her lower back spreads a six-inch long butterfly tattoo -``it makes a statement and gives me a bit of oomph.