What Is a Put Spread Option
A Put Spread Is an Option Spread Strategy That Is Created When Equal Number of Put Options Are Bought and Sold Simultaneously. Unlike the Put Buying Strategy...
A put spread is an option spread strategy that is created when equal number of put options are bought and sold simultaneously. Unlike the put buying strategy in which the profit potential is unlimited, the maximum profit generated by put spreads are limited but they are also, however, relatively cheaper to employ.
How do you make money on a put spread?
Buy a put below the market price: You will make money (after commissions) if the market price of the stock falls below your breakeven price for the strategy. Sell a put at an even lower price: You keep the proceeds of the sale—offsetting some of the cost of the put and taking some risk off the table.
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What is a put call spread?
A call spread refers to buying a call on a strike, and selling another call on a higher strike of the same expiry. A put spread refers to buying a put on a strike, and selling another put on a lower strike of the same expiry.
Elena Rostova holds a Master's degree in Public Health Journalism. She covers groundbreaking medical research, holistic wellness trends, mental health awareness, and nutritional science.
