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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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shaquilleoatmeal
17:58
@babycat: how many essays do you have to finish? Can catch up another night cause thats priority for you rn
babycat
17:58
@shaquilleoatmeal: I did my main one for today what’s the story?
"****** from my city couldn't entertain old boy, Promisin' bank transactions and even bitcoin, I never peaced it up that **** don't sit well with me, Before I take a truce, I'll take 'em to Hell with me" is a good one too
shaquilleoatmeal
18:00
hes so sneaky with it, like if you honestly don't listen for it, you miss it
100%
shaquilleoatmeal
18:00
you want the long or short story ?
WorthlessAttractiveZombie
18:01
So no GULC, eh?
babycat
18:06
long story. we can go to off topic
no gtown still ?
babycat
18:06
she must’ve had weird vibes if it’s a long story
Kittencattigermeow
18:08
does anyone know what issues UNH is facing?
guys i just spent $200 on groceries. joe biden why did you do this to me
will trump make eggs cheap again
BulbasaurNoLikeCardio
18:10
I spent $600 on a custom AR10 upper in September and just got called and told they now may not ship it until fucking January. Trump needs to make my ship shit faster.
18:10
They making food more expensive so less fats
18:10
trust
babycat
18:11
RFK future
18:12
You need to perform Kennedy Presidential Fitness Test to graduate law school
18:12
Over/under on t14 students
18:12
70%?
18:12
20?
18:13
Babycat are you drinking the chemical waters
BulbasaurNoLikeCardio
18:13
Told them this is ridiculous and they took $140 off so my patience has been bought. Now I need to find another distraction from this shitty teacher
18:13
Original price was 460 they just ripped ya off
18:13
jk that is nice
babycat
18:14
@EvolBunny: I love fluoride 😍😍😍
18:14
omg me too
BulbasaurNoLikeCardio
18:15
@EvolBunny: I am fine with them making their cut and all that but I bought it with an adjustable gas block, new LVPO and foregrip so I just have a bunch of parts and ammo with no way to shoot it
@BulbasaurNoLikeCardio: i mean getting paid for their incompetence is based
18:15
they think you are going to attack dj trump
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