Bear spread: Difference between revisions
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''Options speculation''. | |||
A composite speculative deal in two options, which results in a profit/loss profile similar to a conventional put option, except that the upside potential is capped in return for a reduction in the net premium payable. | A composite speculative deal in two options, which results in a profit/loss profile similar to a conventional put option, except that the upside potential is capped in return for a reduction in the net premium payable. | ||
A bear spread can be constructed using put options by buying a put with a given strike price, and selling an otherwise identical put with a lower strike price. | |||
It can also be constructed using appropriate call options. | |||
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* [[Bear]] | * [[Bear]] | ||
* [[Bull spread]] | * [[Bull spread]] | ||
* [[Call option]] | |||
* [[Put option]] | * [[Put option]] | ||
[[Category:Identify_and_assess_risks]] | |||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 15:15, 28 August 2019
Options speculation.
A composite speculative deal in two options, which results in a profit/loss profile similar to a conventional put option, except that the upside potential is capped in return for a reduction in the net premium payable.
A bear spread can be constructed using put options by buying a put with a given strike price, and selling an otherwise identical put with a lower strike price.
It can also be constructed using appropriate call options.
