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In finance, a calendar spread (also called a time spread or horizontal spread) is a spread trade involving the simultaneous purchase of futures or options expiring on a particular date and the sale of the same instrument expiring on another date. These individual purchases, known as the legs of the spread, vary only in expiration date; they are ...
A box spread consists of a bull call spread and a bear put spread. The calls and puts have the same expiration date. The resulting portfolio is delta neutral. For example, a 40-50 January 2010 box consists of: Long a January 2010 40-strike call; Short a January 2010 50-strike call; Long a January 2010 50-strike put; Short a January 2010 40 ...
It is often used to take a position on dividends or interest rates, or to profit from mispriced calendar spreads. [2] A jelly roll consists of a long call and a short put with one expiry date, and a long put and a short call with a different expiry date, all at the same strike price.
A short call is the reverse strategy to the long call. Every long call that’s purchased is also sold or “written” by another trader who thinks the option looks attractively priced. A short ...
The calendar call spread (see calendar spread) is a bullish strategy and consists of selling a call option with a shorter expiration against a purchased call option with an expiration further out in time. The calendar call spread is basically a leveraged version of the covered call (see above), but purchasing long call options instead of ...
A short put ladder is also called a bull put ladder. [9] A ladder can be seen as a modification of a bull spread or a bear spread with an additional option: for instance, a bear call ladder is equivalent to a bear call spread with an additional long call. A bull put ladder is equivalent to a bull put spread with an additional long put.
A risk-reversal is an option position that consists of selling (that is, being short) an out of the money put and buying (i.e. being long) an out of the money call, both options expiring on the same expiration date. In this strategy, the investor will first form their market view on a stock or an index; if that view is bullish they will want to ...
The short straddle can also be classified as a credit spread because the sale of the short straddle results in a credit of the premiums of the put and call. The risk to a holder of a short straddle position is unlimited due to the sale of the call and the put options which expose the investor to unlimited losses (on the call) or losses limited ...