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debit spread

   Also found in: Wikipedia 0.01 sec.
Debit spread
Applies to derivative products. Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a "debit spread." Antithesis of a credit spread.
debit spread
The simultaneous sale of one option and purchase of another option that results in a debit to the investor's account. Thus, more funds are required for the purchase than are received from the sale. An example is the purchase of a 6-month call at a price of $500 and the simultaneous sale of a 3-month call at the same strike price for $300. This trade results in a debit of $200 plus commissions to the investor's account. Compare credit spread.


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Debit Spread to Buy -- Buy Corinthian Colleges (Nasdaq: COCO) Jan 2009 12.
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Debit Spread to Buy -- Buy Emmis Communications (Nasdaq: EMMS) Jun 12.
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Debit Spread to Buy -- Buy Rambus (Nasdaq:RMBS) Jan 2008 5 Call and sell RMBS Jan 2008 12.
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