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 ?
Additionally, the Company acquired put option spread contracts on 160,000 MMBtu per day for 2012 with a floor price of $4.
The Fund pursues its objective by writing a series of call and put option spread combinations on the S&P 500 Composite Stock Price Index, a broad-based U.
Although less expensive than buying a standalone index put option, buying a put option spread will expose the Fund to incremental loss if the value of the index at contract expiration is below the exercise price of the put option sold.
HOUSTON, April 19 /PRNewswire-FirstCall/ -- Plains Exploration & Production Company (NYSE: PXP) ("PXP" or the "Company") today announced it has acquired crude oil put option spread contracts on 31,000 barrels of oil per day in 2011 and 40,000 barrels of oil per day in 2012.
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.
Option Spread Trading provides a comprehensive, yet easy-to-understand explanation of option spreads, and shows you how to select the best spread strategy for any given market outlook.
a broker/dealer specializing in complex option spread execution and innovative trading software.
CHICAGO -- Equity options spreads, in which multiple trades are used to execute a single strategy, have long been widely used by almost all professional traders to better manage their risk and reward (see Option Spread Example, below).
In most respects, a capped index option is the equivalent of a vertical index option spread (a position created by the purchase of one option and the sale of a second option on the same underlying index with the same expiration).
5 percent to 5 percent Russell 2000 Index put option spread; and 3) sells a monthly out-of-the-money (OTM) Russell 2000 Index call option to cover the cost of the put option spread.
Option spread strategies; trading up, down, and sideways markets.