debit spread investment & finance definition
The simultaneous sale of one option and purchase of another option that results in a debit to the investor's account. Thus, more funds are required for the purchase than are received from the sale.
Debit Spread
A strategy where the investor buys a call (put) and sells a further out-of-the-money call (put) to create a spread with an initial debit in the investor's account.
Debit spread - To be profitable the debit spreads must widen.
Call debit spread -(Bullish)- write the call with the higher strike price.
The call that is bought will cost the most.
The debit spread is one form of an option spread. Within the context of this type of spread, the option that is purchased is of greater value than the premium of the option that is sold.
Debit Spread
The difference in value of two options, where the value of the long position exceeds the value of the short position.
Debit Spread
A spread in which more cash is paid out than received. Opposite of Credit Spread.
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Debit Spread A conservative strategy used in selling options. The investor buys a call (option to buy a stock at a certain price for a certain time) and sells a call with a strike price that is higher than the current market value of the ...
Debit spread - An option spread in which there is a net payout of premium.
Declaration Date - The latest day or time by which the buyer of an option must intimate to the seller his willingness or unwillingness to exercise the option.
Debit spread
Applies to derivative products. Difference in the value of two options, when the value of the option bought exceeds the value of the one sold. One buys a "debit spread." Antithesis of a credit spread.
Debt
Money borrowed.
Debit Spread - Option spreads which you have to pay money to put on. Read more about Debit Spreads .
Decay - See Time Decay
Deliverables - The financial assets that are delivered to the options holders when options are exercised.
Debit spread: A spread strategy that decreases the account's cash balance when it is established. A bull spread with calls and a bear spread with puts are examples of debit spreads.
Debit Spread
Buying one option and selling another option, creating a spread position where the value of the long position exceeds the value of the short position.
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Debit spread: An options spread position in which the premium paid on the long position is greater than the premium received on the short position.
Declared date: The date on which a corporation declares a dividend.
Debit Spreads
Debit spreads allow you to profit from what a stock is not going to do. They are similar to credit spreads but work in a different way.
See: Debit Spread; Options; Option Premium; Option Spread; Spread
Crossed Market
A condition in which a broker submits a bid that is greater than the lowest offer of another broker, or vice versa.
See: Asked Price ...
Debit Spread: A spread that initially costs money due to the sold options bringing in less money than the price paid for the purchased options.
Being a vertical debit spread, the bull call spread will enable you to enter a position much cheaper than simply going long the call options, ...
We make money on a debit spread in calls (this is called a bull spread) when the underlying asset increases in value. If the underlying asset is going down then a debit spread in puts is used. This is called a bear spread.
Debit Spread: An option spread in which the premium of the bought option is greater than the premium of the one sold.
debit spread A spread position where the price of the bought option is greater than the price of the sold option. debt An amount borrowed or owed between two parties. Debt comes with the implied...
Debit Spread (also Limit/Debit) A trade that decreases the cash balance of an account because the cost of the options purchased (long position) exceeds the proceeds from the sale of short options.
These spreads are regarded as debit spreads since the purchaser must pay the initial cost of the spread and this, including commission and fees, constitutes all of the market risk of the position.
This is a debit spread and it will cost you because you are you are buying the higher priced, low strike call and selling the lower priced, high strike call. For example, the stock is at $48. The 50 call is $2 and the 55 call is $1.
50 or $150 per contract (this is our bull call debit spread).
With this bull call spread strategy, we only have $1.50 or $150 of capital risk, and if the stock goes to $45, we will make a $350 potential return.
The spread may both be debit spreads (call bull spread vs. put bear spread) or both credit spreads ( call bear spread vs. put bull spread). Break-Even Point--the stock price (or prices) at which a particular strategy neither makes nor loses money.
Options can be traded in various combinations, with fascinating names that are intimidating to many people, such as Credits and Debit Spreads, Ratio Spreads, Iron Condor, Butterfly etc.
Which Way is Next?
Which is Better, a Credit or a Debit Spread?
Long Stock for Less Capital = Long Synthetic
A Long is Not Long and a Short is Not Short?! ...
A core trading strategy that is found within many of the other option trading strategies like the butterfly trade which is constructed from a credit spread and a debit spread, ...
extrinsic value that decays away over time, you could set up a vertical spread by selling an at-the-money option and buying either the out-of-the-money option (creating a credit spread) or buying an in-the-money option (creating a debit spread).
One spread is established using put options and the other is established using calls. The spreads may both be debit spreads (call bull spread vs. put bear spread), or both credit spreads (call bear spread vs. put bull spread).
Applies to Derivative products. Difference in the value of two options, when the value of the one sold exceeds the value of the one bought. One sells a "credit spread." Antithesis of a Debit spread Related: Quality spread.
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 See also: Spread, Option, Options, Trading, Market
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