Backspread

外汇网2021-06-19 14:12:21 60

A type of options spad in which a trader holds more long positions than short positions. The pmium collected from the sale of the short option is used to help finance the purchase of the long options. This type of spad enables the trader to have significant exposure to expected moves in the underlying asset while limiting the amount of loss in the event prices do not move in the direction the trader had hoped for. This spad can be created using either all call options or all put options.

An example of a backspad using call options would be selling one $45 call option for $5 and purchasing two $50 call options for $2.10 each. The trader in this case would benefit from a large move past $50 because he/she is holding more long options than short.

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