On Monday, you would be long 100 shares of AAPL in your account with a cost basis of $93.60 (Put stock at $94.00 – $0.40 initial net credit). All About Vertical Spreads - Definition, An Example, and How to Use ... TD Ameritrade was tops as an online broker for long-term investors and for novices. The company is the only broker that receives the highest 5.0 score for research amenities among all firms participated in the ranking last year. The vertical spread is an option spread strategy whereby the option trader purchases a certain number of options and simultaneously sell an equal number of options of the same class, same underlying security, same expiration date, but at a different strike price.. Vertical spreads limit the risk involved in the options trade but at the same time they reduce the profit potential. ... You would be assigned on the In the Money 94 put. 1) When in doubt, adjust the spread to either a vertical spread, or even consider closing it out. This article shows exactly what you rights and obligations are in each option expiration case. The bear spread owner sells the near-strike option and buys the far-strike one. You might visualize the bear spread owner as the bull spread seller. A vertical spread can expire in 1 of 3 situations. You can choose from many variations on the plain vanilla vertical spread. A vertical call spread for a credit may also be called a short call spread or bear call spread. The vertical bear spread is identical to the bull spread, except for the role reversal of owner and seller.
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