Why Buy Spreads In Options

The most compelling aspect of buying option spreads when trading options is that you use the money from selling options to buy other calls. If you get more money from selling options than the money you spend on buying them, the difference is usually referred to as credit.

So basically, you use the premium from writing options to pay for the costs of paying other premiums. Options traders view spreads as a form of insurance, except that instead stocks you are insuring your options.


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