SIE practice questionmediumSpreads - bull/bear, debit/credit
Which spread is created when a customer buys a higher premium option and sells a lower premium option?
- ACredit spread
- BDebit spread✓ Correct answer
- CRatio spread
- DDiagonal spread
Explanation
Why B — Debit spread
Paying more to buy than to sell results in a debit (money spent). Credit spreads involve receiving more premium than paid.
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