A vertical spread is a combination of a long and a short position in two contracts of the same type (call or put) and expidation date, but with different strikes.
Vertical spreads can be used to capture the profit when one strike is mispriced relative to another strike.
See also horizontal spreads, bull call spread and diagonal spread.
Want to learn more? Download now an interactive reference application for iPhone.
The screenshot shows the following portfolio:
European put struck at 9.000 with expiry in 30 days
European put struck at 10.000 with expiry in 30 days
This is an excerpt from iOptioneer option trading reference application. In order to build the real-time dynamic strategy graph and run simulations you will need to download the application from App Store.