Chapter 06 · Section 6.1

Buy a put spread

To buy a put spread means:

a) To buy a put with the lower exercise price and to write a put with the higher exercise price.
• b) To buy a put with the higher exercise price and to write a put with the lower exercise price.
  Yes. This spread is termed a buy spread as well since the price for the purchased put (high exercise price) exceeds the price for the sold put (low exercise price). The resulting net investment position of $0.85 can be seen on the picture. Continue

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