Selling the spread

Selling the spread

A spread whose option to be sold is trading at a higher premium than the option to be bought.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Sell a Spread

In options, to write a contract for a higher premium than a contract with the same underlying asset that one buys. For example, one my write a put option with a certain underlying after buying a similar put option with the same underlying, though often with a shorter expiration date. One sells a spread to hedge investments: in this case, if either option is exercised, the investor has still made a profit by selling the contract at a higher premium that the one he/she paid for buying the other contract.

Sell the Spread

In an option spread, to sell an option contract at a higher price than one pays to buy another option in the same spread.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
An investor is selling the spread and rolling short puts out three months (to April from January).
"There is metal on the way (to China) so more banks are selling the spread," said a Hong Kong-based trader.
It represents better value for money than selling the spread bookings index at 38 with either IG or Sporting, who, naturally, operate the traditional scoring system of ten for each yellow card and 25 for each red.
While Manchester United, Tottenham and Sunderland look like bankers I would be selling the spread as I believe the others could all struggle.
However it is believed the crooner is having second thoughts about selling the spread after a number of private approaches from local bed and breakfast owners.