A _______ trading strategy involves taking a position in two or more options of the same...

A _______ trading strategy involves taking a position in two or more options of the same type (i.e. two or more calls or two or more puts)

Expert Solution

Trading strategy that involves taking position in two or more options of same type is referred to as Spread trading strategy. Bull Spread and Bear spread are examples to spread strategy.

Bull spread using Call options can created by taking long position in call option with a lower strike price and taking short position in call option with higher strike price. In a similar way, Bull spread using put options can be created by taking long position in put option with lower strike price and taking short position in put option with higher price

Bear spread using call option created by taking long position in call option with a higher strike price and taking short position in call option with lower strike price.In a similar way Bear spread using put option can be created by taking long position in put option with higher strike price and taking short position in put option with lower lower price

Both options have same maturity

Answer: Spread

jeff jeffy answered 1 month ago

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