Chapter 06 · Section 6.1

Option Positions

Pro-memoria: A spread is created by purchasing or selling calls, puts or a combination of the two; The strike prices and expiration months are different. Which option positions can be used to create a vertical spread?

Options with:

a) different expiration dates and different exercise prices.
• b) different expiration dates and the same exercise price.
  No. Only options positions with different exercise prices can be used to create a vertical spread.
  c) same expiration date and different exercise prices.

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