vertical spread

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Vertical spread

Simultaneous purchase and sale of two options that differ only in their exercise price. See: Horizontal spread.

Strike Spread

In options, an investment strategy involving the sale of one option and the purchase of another option identical to the first in every way except the strike price. For example, an investor may write a call giving the buyer the right to buy 1,000 barrels of oil with a strike price of $50 per barrel, and, at the same time, buy a call giving himself/herself the right to buy the same amount of oil at $40 per barrel. In the event that both options are exercised, the investor profits on the difference in the strikes. A strike spread is also called a money spread, a vertical spread, or a price spread.

vertical spread

References in periodicals archive ?
Features include the ability to view and monitor virtual order status and quotes, and to generate option chains for more complex strategies such as covered calls, vertical spreads, calendar spreads, straddles and strangles.
Learn the benefits of vertical spreads, straddles, strangles and some spreads involving both stocks and options.
Learn the benefits of vertical spreads, straddles, strangles, and some spreads involving both stocks and options.
These include the covered call, the naked and the married puts, collars, straddles, vertical spreads, calendar spreads, butterflies, condors, and more.
E*TRADE Securities offers up to 12 options strategy chains including calls & puts, buy-writes, vertical spreads, strangles and straddles.
The Directional Strategies seminar will cover: -- Behavior of options prices -- Volatility -- Buying calls -- Selling puts -- Trading vertical spreads -- Managing positions
While option volume is still prevalent, with the more than 104,000 contracts crossing the tape outpacing the stock's daily average volume by nearly nine to one, quite a bit of the session's call volume appears centered on vertical spreads instead of outright buying.