A bull call spread consists of one long call with a lower strike price and one short call with a higher strike price. A bull call spread is established for a net debit (or net cost) and profits as the underlying stock rises in price.
As a bearish vertical spread strategy, a bear put spread capitalizes on a falling stock price. This strategy is also called a bear put debit spread, because the setup results in a net outflow of cash: options purchased exceed options written. To facilitate a bear put spread, a trader purc...
A calendar spread is typically composed of selling an option with a near-term expiration date and buying an option with a longer-term expiration date. Calendar spreads can be made up with either call options or put options. The maximum loss that could occur is the amount paid for the strate...
Horizontal Spread:A horizontal spread, also known as a calendar spread, is a strategy that involves simultaneously buying and selling options of the same stock with the same strike price but different expiration dates. This strategy aims to benefit from the difference in time decay between the opt...
Define Credit Spread Option: A credit spread option is an investment strategy that involves purchases and selling put or call options with the same maturity dates and different strike prices on the same underlying securities.A B C D E F G H I J K L M N O P Q R S T U V W X Y...
Under what conditions would speculators sell a call option? What is the risk to speculators who sell put options? What is a call option? How does it work? What is a catastrophe call spread option? How do the cash flows of this o...
Box spread consists of a bear put spread, and a bull call spread refers to a trading strategy where the trader speculates a limited price appraisal of the stock. In such a trade, the risk involved is neutral; hence, the investor can enter a position while negating the risk altogether. In...
can be unbearable. I had a conversation with an activist in St. Louis named Spook, and I explained to her this feeling and she told me, “Pain is energy. You have to learn how to channel that energy into something ...
You pay a fee to purchase a call option, called the premium; this per-share charge is the maximum you can lose on a call option. Call options may be purchased for speculation or sold for income purposes or tax management. Call options may also be combined for use in spread or combinatio...
Risk mitigation is required: A bear call spread caps the theoretically unlimited loss possible with the naked short sale of a call option. Selling a call imposes an obligation on the seller to deliver the underlying security at the strike price. There is a potential loss if the underlying secu...