Sunday, March 2, 2014

CREDIT SPREAD

Credit Spread is limiting the risk of options trader

 It is Combination of buy lower strike price derivative and sell higher strike price derivative with
same expiry date.

 EX:     1.  CREDIT CALL SPREAD
               SELL 6200CE@ 132 X 50 =  Rs.6600

                  BUY 6300CE@    74 X 50 = - Rs.3700

                                      NET CREDIT OF Rs.2900
         2.CREDIT PUT SPREAD
               SELL 6400PE@  150 X 50 = Rs.7500

                BUY 6300 PE@    92 X 50 = Rs. 4600

                                       NET CREDIT OF Rs.2900

                                                         

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