1. Option Spreads: Introduction
  2. Option Spreads: Selling And Buying To Form A Spread
  3. Option Spreads: Vertical Spreads
  4. Option Spreads: Debit Spreads Structure
  5. Option Spreads: Credit Spreads Structure
  6. Option Spreads: Horizontal Spreads
  7. Option Spreads: Diagonal Spreads
  8. Option Spreads: Tips And Things To Consider
  9. Options Spreads: Conclusion

It’s common for new traders to jump into the options game with little or no understanding of how options spreads can provide a better strategy design. With a little bit of effort, however, you can learn how to take advantage of the flexibility and full power of options as a trading vehicle. To help you get started, we've put together this tutorial on options spread strategies, which we hope will shorten the learning curve. 


Most options traded on U.S. exchanges take the form of what are known as outrights – the purchase or sale of an option on its own. What the industry terms "complex trades" comprise just a small share of the total volume of trades. It’s in this category that we find the complex trade known as an option spread.

Risk Strategy

Using an option spread involves combining two different option strikes as part of a limited risk strategy. While the basic idea is simple, the implications of certain spread constructions can get trickier.

This tutorial is designed to help you better understand option spreads – including what they are, when they should be used, their risk profiles and conditions for best use. The tutorial also explains how to assess the potential risk (measured in the form of the "GreeksDelta, ThetaVega) involved with the different types of spreads used, depending on whether you are bearish, bullish or neutral. (For a refresher on the basics of options and option terminology, see: Options Basics: What are Options?


Option Spreads: Selling And Buying To Form A Spread
Related Articles
  1. Trading

    Pencil in Profits in Any Market With a Calendar Spread

    Calendar spreads are a great way to combine the advantages of spreads and directional option trades in the same position.
  2. Trading

    Collecting Option Premium In The Grain Market

    Believe it or not, there are some great income-generating strategies that are lower in risk.
  3. Trading

    Stock Options: What's Price Got To Do With It?

    A thorough understanding of risk is essential in options trading. So is knowing the factors that affect option price.
  4. Trading

    Understanding Bull Spread Option Strategies

    Bull spread option strategies, such as a bull call spread strategy, are hedging strategies for traders to take a bullish view while reducing risk.
  5. Trading

    Options Pricing

    Options are valued in a variety of different ways. Learn about how options are priced with this tutorial.
  6. Trading

    Bear Put Spreads: An Alternative to Short Selling

    This strategy allows you to stop chasing losses when you're feeling bearish.
  7. Trading

    Vertical Bull and Bear Credit Spreads

    This trading strategy is an excellent limited-risk strategy that can be widely used.
Frequently Asked Questions
  1. Earnings per share (EPS) versus diluted EPS

    Does EPS worth more than Diluted EPS? Learn about EPS and diluted EPS, how they are calculated, and the difference between ...
  2. How the Republican and Democratic approaches to regulating the economy

    Here is an overview of the Democratic and Republican approaches to economic issues. Learn about the role in government in ...
  3. The Difference Between an Operating Expense and Capital Expense

    Learn more about the differences between an operating expense (OPEX) and a capital expense (CAPEX), and see how they are ...
  4. The 9 Major Financial Institutions

    There are nine major types of financial institutions. Understand these major types of financial institutions that exist in ...
Trading Center