| CHAPTER 10 |

Spreading Strategies

Spreading strategies are among the most common strategies done in option markets. In a spreading strategy a trader will take a position in one contract or set of contracts, and an opposing position in a different contract or set of contracts. The opposing positions may be directional (delta), or they may be volatility (gamma or vega) positions.

1.  Contracts are trading at the following prices:


What will be your credit (+) or debit (–) if you do each of the following?

a.   buy 1 contract A and sell 1 contract C

b.   buy 1 contract B and sell 1 contract D

c.   buy 1 contract B and sell 2 contract A

d.   buy ...

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