Good Words Never Die

Bear Put Spread / Debit Spread / Vertical Spread

Example:

XYZ is trading at $72

  • Buy 1, 3 month $72 Put at $5.30
  • Sell 1, 3 month $65 Put at $2.75
  • Net cost basis = $2.55

Bear Call Spread / Credit Spread / Vertical Spread

Example:

XYZ is trading at $72

  • Sell 1, 3 month $75 Put at $3.00
  • Buy 1, 3 month $80Put at $2.00
  • Net cost basis = $1.00

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