short leg(redirected from Short Legs)
Also found in: Dictionary, Encyclopedia.
In an option spread, any option contract on which one has a short position. For example, if one has bought a call and sold a put as part of one's option strategy, the put is said to be the short leg of the spread.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The side of an option spread that has been sold short. With a spread made up of owning a September 30 call and being short a December 30 call, the December 30 call is the short leg. Compare long leg.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.