money spread

Strike Spread

In options, an investment strategy involving the sale of one option and the purchase of another option identical to the first in every way except the strike price. For example, an investor may write a call giving the buyer the right to buy 1,000 barrels of oil with a strike price of $50 per barrel, and, at the same time, buy a call giving himself/herself the right to buy the same amount of oil at $40 per barrel. In the event that both options are exercised, the investor profits on the difference in the strikes. A strike spread is also called a money spread, a vertical spread, or a price spread.

money spread

In options trading, the combination of buying one option and selling another option identical to it except for the strike price. For example, purchasing a January call with a strike price of $30 and selling a January call with a strike price of $25 is a money spread. Also called price spread, strike spread, vertical spread.