What is an options debit spread?

What is an options debit spread?

A debit spread occurs when the investor buys options with a higher premium and sells options with a lower premium thereby resulting in a net premium outflow.


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      An options spread is when the investor buys as well as sells options of the same underlying security but of different strike prices and/or different expiries.
    • What is an options credit spread?

      A credit spread occurs when the investor buys options with a lower premium and sells options with a higher premium, thereby resulting in a net premium inflow.
    • What are diagonal spreads in options?

      Diagonal Spreads are created when the investor uses options of the same underlying security but with different strike prices and different expiry series.
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      Horizontal Spreads or Calendar Spreads are created when the investor uses options of the same underlying security and the same strike prices but with different expiry series.
    • What is a bear spread?

      If an option spread strategy is designed to be profitable when the price of the underlying security falls, it is known as a Bear Spread.