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.
The horizontal spread takes its name from the fact that the options used to create the spread are listed horizontally within an options price table.
The horizontal spread is often called time spread since the options positions show different expiration dates.