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Debit Spread
FundamentalsAn options strategy that involves buying one option and selling another at a different strike price for a net cost (debit). Limits both maximum profit and maximum loss.
Related Terms
Options
Contracts that give the right (but not the obligation) to buy (call) or sell (put) a security at a specified price before a certain date.
Strike Price
The predetermined price at which an options contract can be exercised to buy (call) or sell (put) the underlying security.
Covered Call
An options strategy where a trader sells a call option against shares they already own, collecting premium income in exchange for capping upside potential at the strike price.