Chapter 06 · Section 6.1

Horizontal Spread

Remember: 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 options positions can be used to create a horizontal spread? Options with:

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

(Click here for help)