option spread

Option spread

The trading of options of the same class at the same time in order to profit from changes in the size of the spread between different options.

Option Spread

An investment strategy in which one has a long position on an option contract while having a short position on another option on the same underlying asset, with a different strike price and/or expiration date. One uses an option spread to profit from price movements in the underlying asset. There are a number of different kinds of option spreads. See also: Call Spread, Put spread.

option spread

References in periodicals archive ?
Option spread strategies; trading up, down, and sideways markets.
The quoted option spread does not correspond to any transaction in the market place.
A more efficient approach would be to prohibit exercise of stock option awards unless the executive holds more than the equivalent number of shares in the option spread (on an after-tax basis), thus encouraging executives to hold stock options which will be more volatile in response to stock price movements.
Preliminary analysis reveals that many insurers can hedge effectively using call option spread contracts based on a statewide loss index, and that even small insurers can make effective use of index options.
However, at the time of exercise, you are required to pay the income tax on the option spread, just as you would pay the tax if you had not transferred the options but had simply exercised them in your own name.
A recalculation must be determined as of the valuation date used in the initial calculation, using the same interest rate and option spread, but the procedure allows the use of a different method from that used in the original calculations, as long as both methods are consistent with GAAP.
Notable three-way option spread in McDermott ahead of earnings next week.
In 2006,W would recognize ordinary income in the amount of the option spread.
Because the employees' ISO stock was immediately cashed out as part of the LBO, they suffered "disqualifying dispositions" of their stock, causing them to be taxed on the option spread as ordinary income rather than as capital gains (which would have been the case had they held their stock for one to two years after exercise of the option).
83-3(j)(2), Example (3), it would appear that the insider is taxed on the option spread on June 2, 1991.
In a put option spread, the Fund writes index put options in combination with the purchase of index put options at a higher exercise price.