How Do Different Strike Prices Create a Vertical Spread?
A vertical spread is created by simultaneously buying and selling options of the same type (both calls or both puts) and the same expiration date, but with different strike prices. This strategy limits both potential profit and loss.
Glossar
Buying and Selling Options
Transaction ⎊ Buying and selling options constitutes the fundamental transaction in the derivatives market, involving the transfer of a contractual right, not an obligation, to trade an underlying crypto asset at a predetermined strike price.
Vertical Spread
Spread ⎊ A vertical spread is a fundamental options strategy that involves taking both a long and a short position in options of the same class and expiration date, but with different strike prices.
Different Strike Prices
Volatility Spectrum ⎊ Different strike prices within cryptocurrency options represent a spectrum of potential volatility expectations, influencing derivative pricing and risk exposure.