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Basics of Spreading: Time Spreads
Continuing Education Credit: 1 hour*
*Available for fee-based courses only, please send us an email for more information.
Course Expiration: Course access expires 12 weeks from date of registration
Cost: Free
Course Overview:
Third in the series, this module presents detailed explanations and examples of Time Spreads.
The following spreads are covered in this module:
- Long Call Time Spread
The long call time spread is a spread made up of call options on the same underlying stock (or index). It’s constructed by purchasing a call with a farther-term expiration and at the same time selling (writing) a call with a nearer-term expiration but with the same strike price.
- Long Put Time Spread
The long put time spread is a spread made up of put options on the same underlying stock (or index). It’s constructed by purchasing a put with a farther-term expiration and at the same time selling (writing) a put with a nearer-term expiration but with the same strike price.
Each Spread discussion includes an analysis of:
- General Nature & Characteristics
- Debit vs. credit
- Motivation for Spreading
- Risk vs. Reward
- Maximum Profit at Near-Term Expiration
- Maximum Loss
- Break Even Points at Near-Term Expiration
- Partial Profit or Loss
- Profit & Loss Before Expiration
- Effect of Volatility
- Effect of Time Decay
- Assignment Risk
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