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Debit Spread

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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
An option strategy in which one buys an option for a higher premium and sells another option on the same underlying asset at a lower premium. One profits from a debit spread when there is a large change in the price of the underlying asset that will increase the value of the option with the higher premium; the option with the lower premium hedges the investor's risk.
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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The total outlay for this debit spread was $48,691, with the trader realizing a maximum profit of $4.
Schaeffer's Option Blog: Bearish Put Spread on Research In Motion ... by Business Wire
Simply put, a long butterfly spread is the combination of a credit spread and a debit spread surrounding a single strike in the middle.
Schaeffer's Option Strategist: Long Butterfly Spread by Business Wire
In simple and down-to-earth language, Kraft explains a variety of strategies including buying and selling options; covered call writing; collars; using closed end mutual funds for income; debit spreads, volatility-based straddles; ratio backspreads; condors; and calendar spreads.
Research and Markets: Trade Your Way to Wealth: Earn Big Profits with ... by Business Wire
 
 
 
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