A vertical spread is an strategy in which a and of the same type, and are opened at separate The rights afforded by the option offset the risks of the option making it a
There are four variations of this strategy:
If a vertical spread is sold for a net , the spread is considered short. The maximum possible profit is equal to the total credit received. The maximum loss is equal to the width of the strikes minus the credit.
If the vertical spread is purchased for a net the spread is considered long. The maximum possible profit is calculated by subtracting the debit paid from the width of the strikes. The maximum possible loss is equal to the debit paid.