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Options Spread Calculator
Option Spreads are combination trades where two positions are initiated to form the "spread". Option Spreads use the same underlying stock and expiration month, but have different strike prices. Spreads can be either a Debit Spread or Credit Spread. |
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A Debit Spread is used to buy high price stocks that would be otherwise too expensive. When placing a debit spread money comes out of your brokerage account to place the trade but much less than if you bought the option naked. Credit Spreads allow you to sell options with limited risk. In this type of trade, you collect money into your account from option premium. You get to keep the premium if the option expires out of the money. When placing a Credit Spread money is credited to your brokerage account; however money will be held as margin that you will not be allowed to trade to cover the possibility of a losing trade. Use the spread calculator below to see how spread trades work.