Veritcal Debit Spreads

Discussion in 'Options' started by jones247, Jan 26, 2009.

  1. spindr0

    spindr0

    All of this is all true about spreads. IV change affects ITM and OTM spreads differently.

    But IV change has very little effect on equivalent spreads. Since one is for a credit and the other is for a debit, what one gains, the other one loses, so give or take a few cents, both positions have the same result.
     
    #11     Jan 27, 2009
  2. I guess it comes down to terminology. When I think of a bull put spread or a bull call spread, I immediately picture a graph with the price of the underlying higher than the short strike. Obviously, if the price moves against you (lower than the short strike), the positive theta and negative vega will reverse.

    I've always assumed opening the spread with the underlying lower than the short strike, and therefore with negative theta from the start, had another name like "the ultra bull put spread" or "extra strength call bull spread." :p
     
    #12     Jan 28, 2009