Which of the following is a horizontal spread? a) Buy 1 FBN Aug 50 Call; Long 1 XYZ Aug 50 Put b) Write ...

By Investopedia Staff AAA
Q:
Which of the following is a horizontal spread?
a) Buy 1 FBN Aug 50 Call; Long 1 XYZ Aug 50 Put
b) Write 1 PDQ Feb 35 Call; Buy 1 PDQ Apr 45 Call
c) Short 1 XYZ Mar 30 Put; long 1 XYZ Nov 30 Put
d) Long 1 ABC Jan 50 Call; short 1 ABC Jan 60 Call
A:

The correct answer is c.
A horizontal spread is also called a time spread or a calendar spread. The terms of the two contracts are identical except for the expiration date. This strategy is called horizontal because the expiration dates are arrayed horizontally in newspaper quotes. Therefore, the correct answer is c: "Short 1 XYZ Mar 30 Put; long 1 XYZ Nov 30 Put".

The remaining options are incorrect because:
1) "Long 1 ABC Jan 50 Call; short 1 ABC Jan 60 Call" is a vertical or price spread
2) "Buy 1 FBN Aug 50 Call; Long 1 XYZ Aug 50 Put" is a long straddle.
3) "Write 1 PDQ Feb 35 Call; Buy 1 PDQ Apr 45 Call" is a diagonal spread.


RELATED FAQS

  1. The popular trading system "Instinet" is situated in which of the following markets ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  2. When a floor broker asks a specialist, “How’s PDQ?” ...

    The correct answer is d) When the specialist gave the floor broker the quote of “59.20 to 35; 6 by 11,”  the quote meant ...
  3. A person purchases stock XYZ (an Over The Counter stock) from a company who is also ...

    The correct answer is c When the firm is a market maker in the stock then it must act as a principle. Principal is the main ...
  4. An individual made a lump-sum deposit into a variable annuity of $25,000 ...

    The correct answer is c). Early withdrawal from a non-qualified annuity--prior to age 59½, except for death or disability, ...
RELATED TERMS
  1. Series 79

    A examination to ensure a candidate is qualified to become a ...
  2. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  3. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  4. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  5. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  6. Series 28

    An exam given by the Financial Industry Regulatory Authority ...

You May Also Like

Related Articles
  1. Professionals

    Should You Add A Securities License ...

Trading Center