When I place an options order with my broker, the web site has a column called "Price" and then the following values - Market, Credit, Debit, or Even. I have to choose one of
these before I am able to place the order. What do these really mean, and how does it affect the underlying transaction? When would you use one vs. another?
It does not affect the transaction in any way. It's just a method for your broker to be certain that you know what you are trying to do.
Credit means that you want to collect cash for the order. Thus, it's either a 'sell' or a spread in which the option you buy has a lower price than the option you sell.
Debit is just the opposite. It means you want to pay cash for the position. Thus, you are either buying an option or are trading a spread in which the option you buy costs more than the option you sell.
Even refers to a spread transaction in which the option you buy and the option you sell have the same price (it doesn't matter what the price is, as long as they are equal to each other. This is a abbreviation for 'even money.'
I don't know what 'Market' means. It may refer to the exchange to which the order is being sent. Or it may refer to a 'market order' instead of a 'limit order.' Never, Never use market orders.
Each broker has it's own way of doing things, so I cannot know these details with absolute certainly. If this is not clear to you, phone your broker and they will help you.
Mark D. Wolfinger