Finance Numericals

Option spreads:   It is a strategy of buying and selling same underlying asset with different expiration date and strike price. Type of option Spread: Horizontal Spread:   It is also known as calendar spread. It is a strategy of buying and selling same underlying asset with same strike price but at different expiration date. Diagonal Spread:   It is a strategy in which buying and selling of call or put option strike price and expiration date is different. Vertical Spread:   It is a strategy of buying and selling same underlying asset with same expiration date but at different strike price. It is further classified into: ·            Bull Call spread : In this strategy buying a call option at lower strike price (in the money) and sell (short) another call at higher strike price (out of the money) if the price of underlying assets will increases in near future. It creates debit spread because premium paid is higher than premium received. Maximum Profit = Strike