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In options trading, a vertical spread is an options strategy involving buying and selling of multiple options of the same underlying security, same expiration date ...
Simple payoff diagrams of the four types of ladder. In finance, a ladder, also known as a Christmas tree, is a combination of three options of the same type (all calls or all puts) at three different strike prices. [1] A long ladder is used by traders who expect low volatility, while a short ladder is used by traders who expect high volatility.
In options trading, a bull spread is a bullish, vertical spread options strategy that is designed to profit from a moderate rise in the price of the underlying security. Because of put–call parity , a bull spread can be constructed using either put options or call options .
The iron condor is an options trading strategy utilizing two vertical spreads – a put spread and a call spread with the same expiration and four different strikes. A long iron condor is essentially selling both sides of the underlying instrument by simultaneously shorting the same number of calls and puts, then covering each position with the purchase of further out of the money call(s) and ...
The condor is so named because of its payoff diagram's perceived resemblance to a large bird such as a condor. [6] An iron condor is a strategy which replicates the payoff of a short condor, but with a different combination of options. [7]
A spread position is entered by buying and selling options of the same class on the same underlying security but with different strike prices or expiration dates. An option spread shouldn't be confused with a spread option. The three main classes of spreads are the horizontal spread, the vertical spread and the diagonal spread. They are grouped ...
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Payoff chart from buying a butterfly spread. Profit from a long butterfly spread position. The spread is created by buying a call with a relatively low strike (x 1 ), buying a call with a relatively high strike (x 3 ), and shorting two calls with a strike in between (x 2 ).