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.
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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.
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.
What are horizontal spreads/Calendar spreads in options?
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 bull spread?
If an option spread strategy is designed to be profitable when the price of the underlying security rises, it is known as a Bull Spread.