buy a spread

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Buy a Spread

An options position in which an investor buys an option at a given premium and writes another option with a lower premium and a different strike price. It is important to note that both options expire on the same day. An investor buys a spread to create a position in which he/she will make a profit whether or not the options are exercised. If the investor exercises the option he/she bought, it is because he/she expects to profit on the resale of the underlying asset. If the option with the lower premium is exercised, the investor profits on the sale of the underlying. See also: Exotic option, Spread.

buy a spread

In options trading, to establish a spread position in which the premium on the option purchased exceeds the premium on the option sold. A typical example would be to buy a call on Microsoft with a $60 strike price for a premium of $300 and to sell a Microsoft call with a $65 strike price for $125 (both expiring on the same date).
References in periodicals archive ?
As the building's developer, Zeckendorf was able to buy the spread for a lower price than other penthouses there, most of which sold for north of $20 million.
They didn't open a tab for the night but the managers did buy the spread and rounds of drinks.
A FRIEND of mind had a theory that you should always buy the spread performance of the very best teams, because even during games when the goals wouldn't go in for them they would probably still rack up a lot of the other things for which points are awarded, like corners.
The ScaleTrader algorithm can be programmed to buy the spread and subsequently take profit by selling the spread if the difference reaches predetermined levels set by the user.