Backspread
Categories: Derivatives, Trading
What are options traders talking about when they propose a backspread? No, not a new exercise or a porn search topic.
A backspread is a bundle of options contracts in which there are more long positions than short positions. Selling an options contract collects or earns you a premium to offset the cost of buying (being long) on another contract. A call backspread is one in which you would own more long call contracts than short call contracts. A call backspread would be bullish, whereas a put backspread would be bearish.