Bear put spread

Bear put spread

In finance, a bear put spread is a limited profit, limited risk options trading strategy that can be used when the options trader is moderately bearish on the underlying security. It is entered by buying higher striking in-the-money put options and selling the same number of lower striking out-of-the-money put options on the same underlying security and the same expiration month.

The options trader hopes that the price of the underlying drops, maximizing his profit when the underlying drops below the strike price of the written option, netting him the difference between the strike prices minus the cost of entering into the position.

References

* cite book
last = McMillan| first = Lawrence G.
title = Options as a Strategic Investment
edition = 4th ed.
publisher = New York : New York Institute of Finance
year = 2002
id = ISBN 0-7352-0197-8


Wikimedia Foundation. 2010.

Игры ⚽ Поможем решить контрольную работу

Look at other dictionaries:

  • Bear Put Spread — A type of options strategy used when an option trader expects a decline in the price of the underlying asset. Bear Put Spread is achieved by purchasing put options at a specific strike price while also selling the same number of puts at a lower… …   Investment dictionary

  • bear put spread — The purchase of a put with a high strike price against the sale of a put with a lower strike price in expectation of declining prices. The maximum profit is calculated as follows: (high strike price low strike price) net premium received where… …   Financial and business terms

  • Bear spread — In options trading, a bear spread is a bearish, vertical spread options strategy that can be used when the options trader is moderately bearish on the underlying security.Because of put call parity, a bear spread can be constructed using either… …   Wikipedia

  • bear spread — In most commodities and financial instruments, the term refers to selling the nearby contract month, and buying the deferred contract, to profit from a change in the price relationship. Chicago Board of Trade glossary Sale of a near month futures …   Financial and business terms

  • BEAR PUT DEBIT SPREAD - медвежий дебетовый пут спрэд — медвежий опционный спрэд, сочетающий покупку пут опциона почти в деньгах и продажу пут опциона вне денег . Данный спрэд характеризуется ограниченным риском, ограниченной потенциальной прибылью и отсутствием маржевых требований …   Глоссарий финансовых и биржевых терминов

  • Options spread — Spread option redirects here. For the American football offensive scheme, see Spread offense. Options spreads are the basic building blocks of many options trading strategies. A spread position is entered by buying and selling equal number of… …   Wikipedia

  • Debit spread — In finance, a debit spread, AKA net debit spread, results when an investor simultaneously buys an option with a higher premium and sells an option with a lower premium. The investor is said to be a net buyer and expects the premiums of the two… …   Wikipedia

  • Vertical spread — In options trading, a vertical spread is an options strategy involving buying and selling of multiple options of the same underlying security, same expiration date, but at different strike prices. They can be created with either all calls or all… …   Wikipedia

  • Bear Stearns — Industry Investment services Fate Bought by JP Morgan Chase in September 2008 Founded 1923 Defunct …   Wikipedia

  • Put-Option — Payoff eines Puts zum Laufzeitende t=T; Hockeystick Funktion Auszahlungsstruktur einer Put Option abhängig vom Preis des Basiswertes am Laufzeitende. Eine Put Option …   Deutsch Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”