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An option spread is a simultaneous Buy and Sell of options of the same underlying asset. The strike prices and expiration dates are different in such spreads.
Types of Option Spreads are-
Option spreads can be entered on a net credit or a net debit. If the premiums of the options sold are higher than the premiums of the options purchased, then a net credit is received when entering the spread. If the opposite is true, then a debit is taken. Spreads that are entered on a debit are known as debit spreads while those entered on a credit are known as credit spreads.
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