hi mark, Hi Debra,

i'm a little confused. which strike is mentioned first when referring to a spread? The important part is to know what 'buy' or 'sell' a specific spread means.  To sell a spread always means to sell the higher priced option. Thus, if say 'sell the 560/570 call spread or 'sell the 570/560 call spread" is should mean the same thing. One problem with the options world is that there is no one in charge of establishing a specific language.  That can make it confusing.


for example, if i'm trying to say "sell a 570 put and buy a 560 put", then do i say sell a 560/570 put spread  or sell a 570/560 put spread? is the long option's strike price always mentioned first or the short option first? The more expensive option comes first is it the same order when referring to call spreads? Same rule means the 560 comes first what about when you BUY a spread, do you switch the numbers around? No.

I believe in defining the spread by listing the more costly option first - regardless of strike price.

Thus, when it's a call spread, it's the 560/570 call spread - regardless of whether you are buying or selling.  When you 'buy' the 560/570 call spread, you are buying the more costly 560s.  When you sell the 560/570 call spread, you sell the more costly option.

The put spread is the 570/560 put spread, and you are either buying that spread (buy 570 put) or selling that spread (sell 570 put).


i just read your chapter on credit spreads (in rookie's guide) and understand the basic strategy but will obviously have to read it a few more times to get the finer points  :-)   let me know if you have more questions - or if this is not clear.

hope you are well,  Yes, Thanks.
Mark
 
debra

--
Mark D. Wolfinger

The Rookie's Guide to Options:The Beginner's Handbook of Trading Equity Options

blog: http://blog.mdwoptions.com/options_for_rookies

website:  http://www.mdwoptions.com