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Spread Option

   Also found in: Wikipedia 0.02 sec.
Spread option
A position consisting of the purchase of one option and the sale of another option on the same underlying security with a different exercise price and/or expiration date.

Spread Option
In options, the writing of a contract and the purchase of another with the same underlying asset, but with different strikes and expiration dates. A spread option is intended to reduce the risk of having a particular position on the underlying asset. The profit on a spread option comes from the difference in the strike prices of the two contracts. Spread options are usually traded over-the-counter. See also: Crack, Crush, Spark.


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