The money deducted from an options trading account to establish an options trade. This is created by purchasing higher premium amount and/or selling lower premium amount and is usually used to speculate on direction of the underlying.
A strategy with an upfront cost (debit) that profits if the underlying (stock) rises in price. This spread involves buying two calls with the same expiration date, but with a different strike price. A bull call spread aims to reduce the upfront cost of buying call options in order to profit from stocks that are expected to rise moderately. [click to read more]
Credit is money received in the account from the trade of a single or combination of options where the premium you receive is greater than the debit you paid. It is very common to receive a credit when shorting (writing) an option contract.
An option spread strategy in which credit (premium) is received by trader through selling more premium than debit to be paid for long options in the same underlying stock but different strike prices or expiration dates.[click to read more]
An options trading strategy in which near term open option contract is squared off and new similar strike longer term expiration option position is established to replace the original trade this is typically done for a credit with short positions and a debit with long p[click to read more]
Any option strategy whose payoff replicates the payoff of the underlying long stock. For example a short put and a long call is a synthetic stock holding. Even though this straetgy replicates the payoff of the stock, the premium collected from the sale of the put is us[click to read more]
An options spread in which one option is bought and another is sold of the same expiry date but of different strike price. These trades can either be put on for a debit (a bet on direction/price movement) or for a credit (a bet that the underlying will not move to a sp[click to read more]