[Clarification of DIA Spread/Credit Spread]
Dear Member:
Yesterday afternoon, I sent an alert that I was opening a spread on DIA, selling the Jun 113 calls and buying the 114 calls at a limit of $0.40. Someone quite correctly wrote to ask whether that was a credit or debit spread. It is a credit spread. Anytime I am selling the at or near the money option and buying the farther out of the money option, I will be taking in more money selling the at the money or near the money option than I will spend buying the farther out of the money option so my account will receive an initial credit the following trading day. That is true whether the spread be a bear call spread or a bull put spread.
Hope that clarifies my trade for everyone.
Have a great day.
Bill
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