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The call backspread (reverse call ratio spread) is a bullish strategy in options trading whereby the options trader writes a number of call options and buys more call options of the same underlying stock and expiration date but at a higher strike price. It is an unlimited profit, limited risk strategy that is used when the trader thinks that ...
The "straight" ratio-spread describes this strategy if the trader buys and writes (sells) options having the same expiration. If, instead, the trader executes this strategy by buying options having expiration in one month but writing (selling) options having expiration in a different month, this is known as a ratio-diagonal trade.
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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It involves simultaneously buying and selling (writing) options on the same security/index in the same month, but at different strike prices. (This is also a vertical spread) If the trader is bearish (expects prices to fall), you use a bearish call spread. It's named this way because you're buying and selling a call and taking a bearish position.
The Bear Call Credit Spread (see bear spread) is a bearish strategy and consists of selling a call option and purchasing a call option for the same stock or index at differing strike prices for the same expiration. The purchased call option is entered at a strike price higher than the strike price of the sold call option.
A call option is in the money when the strike price is below the spot price. A put option is in the money when the strike price is above the spot price. With an "in the money" call stock option, the current share price is greater than the strike price so exercising the option will give the owner of that option a profit.
Image source: The Motley Fool. Agree Realty (NYSE: ADC) Q4 2024 Earnings Call Feb 12, 2025, 9:00 a.m. ET. Contents: Prepared Remarks. Questions and Answers. Call ...