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Put spread

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Put spread
A put spread reduces the cost of buying a put Option by selling another put at a lower level. This limits the amount the purchaser can gain if the Underlying goes down, but the Premium received from selling an out-of-the money put partly finances the At-the-money put. A put spread may also be useful if the purchaser thinks there is only limited downside in the market.

See also Call spread, Option combination strategies
Posted by  Privatebanking.com
 
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