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Page 318 There are several types of spread positions. They are: Bullish Call Spread-You expect a rise in the underlying stock but are not very certain. You buy a call and then write a call at a higher strike price. Our example above is a bullish call spread. Bullish Put Spread - You expect a rise in the underlying stock but are not very certain.You buy a put and then write a put at a higher strike price.
Bearish Call Spread - You expect a fall in the underlying stock but are not very certain. You buy a call and then write a call at a lower strike price. Bearish Put Spread - You expect a fall in the underlying stock but are not very certain. You buy a put and then write a put at a lower strike price. As if the above types weren't enough, there are more types of spreads: Time Or Calendar Spreads - The options have the same strike prices but different expiration dates. Price Or Vertical Spreads - The options have the same expiration dates but different strike prices. Our example above was a vertical bullish call spread. Diagonal Spreads - A combination of both vertical and calendar spreads where the options have different strike prices and different expiration dates. … |
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