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LSDefine

Simple English definitions for legal terms

option spread

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A quick definition of option spread:

An option spread is a term used in finance to describe the difference between the price of an option and the market price of the underlying stock when the option is exercised. It can also refer to the difference between the interest rate that a financial institution must pay to attract deposits and the rate at which money can be loaned, or the difference between the highest price a buyer will pay for a security and the lowest price at which a seller will sell a security. In securities, an option spread can also refer to the simultaneous buying and selling of one or more options or futures contracts on the same security in order to profit from the price difference. In investment banking, the spread is the difference between the price the underwriter pays the issuer of the security and the price paid by the public in the initial offering, which compensates the underwriter for its services.

A more thorough explanation:

An option spread is a term used in securities trading to describe the difference between the option price and the market price of the underlying stock when the option is exercised. This spread can be used to determine the potential profit or loss of an options trade.

  • Suppose an investor buys a call option on a stock with a strike price of $50. If the stock price rises to $60, the investor can exercise the option and buy the stock at the strike price of $50, then sell it on the market for $60, making a profit of $10 per share. In this case, the option spread is $10.
  • Another example is a put option on a stock with a strike price of $100. If the stock price falls to $80, the investor can exercise the option and sell the stock at the strike price of $100, then buy it back on the market for $80, making a profit of $20 per share. In this case, the option spread is $20.

These examples illustrate how the option spread can be used to calculate potential profits or losses in options trading. By understanding the option spread, investors can make informed decisions about whether to buy or sell options based on their expectations for the underlying stock's price movement.

option premium | Options Price Reporting Authority

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im distracting myself by schizo-scrolling r/lawschoolamissions and every conceivable data point on this godforsaken website
it is not working
Haaa I naturally want to do that too. I’m trying to stop. They need a surgeon general’s warning on this site for perspective law students
i spend more time on here then anything else trying to rationalize that the waves from last year will match waves for this year (they won't) and that the stats of people with the same stats are indicative of my own (they aren't)
There aren't many people in my stat range so I pretty much know every result in my range after being on here for a few years
9:28
congrats on the 172 bruce
go dawgs fr
9:29
roll tide
do we foresee a fordham election day wave today (i'm delusional)
WorthlessAttractiveZombie
9:31
I think so, Jack
9:31
some people hate him. some people love him, but he a real one: https://youtu.be/w5oEqiVQcF4?t=173
9:32
[kevin oleary]
worthless i trust you implicitly you know what it will happen now.
worthless i trust you implicitly you know what it will happen now.
worthless i trust you implicitly you know what it will happen now.
worthless i trust you implicitly you know what it will happen now.
worthless i trust you implicitly you know what it will happen now.
WorthlessAttractiveZombie
9:34
I mean if Fordham doesn't release today I will purposefully get on a train, go to new york, and then take the stinkiest shit inside the admission office's toilet (potentially clogging it and forcing them to get a plumber)
IS IT ONLY ON MY END WHY DID THAT SEND TEN MILLION TIMES
HELLO
WorthlessAttractiveZombie
9:35
it sent a million times lol
WHAT HAPPENED
yeah i thought you were tweaking for a second
i'm so sorry everyone what the actual fuck this website hates me
WorthlessAttractiveZombie
9:35
Jack's just tweaking on LSD no biggie
to be fair this accurately represents my mental state
election day psychosis coming in hot (fordham)
usc pls pull through .....
i literally just need one A so i can relax before my ED decision
WorthlessAttractiveZombie
9:38
oh that's right USC might release
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