What is an Option Spread?

Posted on February 23rd, 2010 admin No Comments

An option spread trade is created with the simultaneous buying and selling of options of the same underlying share but with varying strike prices. Option spreads can have a bullish or bearish outlook and can be created by either call options or put options. Therefore it is possible to set up a bull spread using calls or puts and a bear spread using calls or puts. It is important to understand the four strategies and when to implement these strategies. The four option spreads are Bull Call Spread, Bull Put Spread, Bear Call Spread, and Bear Put Spread.


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