Backspread

The Backspread enables the trader to have significant exposure to expected moves in the underlying asset while limiting the amount of loss in the event prices do not move in the direction the trader had hoped for. 

Backspread

A Backspread is a type of options spread in which a trader holds more long positions than short positions.


Backspread Interpretation

The premium collected from the sale of the short option is used to help finance the purchase of the long options. The Backspread enables the trader to have significant exposure to expected moves in the underlying asset while limiting the amount of loss in the event prices do not move in the direction the trader had hoped for. This spread can be created using either all call options (Call Backspread) or all put options (Put Backspread).

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