# Spreads and combinations

Please help improve this article by adding citations to reliable sources. Diagonal spreads are constructed using options of the same underlying security but different strike prices and expiration dates. For example, a January box consists of:. Energy derivative Freight derivative Inflation derivative Property derivative Weather spreads and combinations. They are grouped by the relationships between the strike price and expiration dates of the options involved.

If the premiums of the options sold is higher than the premiums of the options purchased, then a net credit is received when entering the spread. Please help improve this article by adding citations to reliable sources. If a spread is designed to profit from a rise spreads and combinations the price of the underlying security, it spreads and combinations a bull spread. A box spread position has a constant payoff at exercise equal to the difference in strike values.

This page was last edited on 31 Augustat A bear spread is a spread spreads and combinations favorable outcome is obtained when the price of the underlying security goes down. By using this site, you agree to the Terms of Use and Privacy Policy. A box spread position has a constant payoff at exercise equal to the difference in strike values.

Retrieved from " https: The calls and puts have the same expiration date. If the opposite is true, then a debit is taken. Views Read Edit View history. From Spreads and combinations, the free encyclopedia.

A box spread position has a constant payoff at exercise equal to the difference in strike values. A box spread consists of a bull call spreads and combinations and a bear put spread. For example, a January box consists of:.

For example, a January box consists of:. The three main classes of spreads are the horizontal spread, the vertical spread and the diagonal spread. Energy derivative Freight derivative Inflation derivative Property derivative Spreads and combinations derivative. For example, a bull put spread is basically a bull spread that is also a credit spread while the iron butterfly can be spreads and combinations down into a combination of a bull put spread and a bear call spread.

There are also spreads in which unequal number of options are simultaneously purchased and written. If the opposite is true, then a debit is taken. A bear spreads and combinations is a spread where favorable outcome is obtained when the price of the underlying security goes down. For example, a January box consists of:.

A box spread consists of a bull call spread and a bear put spread. Unsourced material may be challenged and removed. If the opposite is spreads and combinations, then a debit is taken. They are called diagonal spreads because they are a combination of vertical and horizontal spreads.