Spread Option
A type of option that derives its value from the difference between the prices of two or more assets. Spread options can be written on all types of financial products including equities, bonds and currencies. This type of position can be purchased on large exchanges, but is primarily traded in the over-the-counter market. Investopedia Says:
Some types of commodity spreads enable the trader to gain exposure to the commodity's production process. This is created by purchasing a spread option based on the difference between the inputs and outputs of the process. Common examples of this type of spread are the crack, crush and spark spreads. Related Terms:
Crack Spread
Crush Spread
Derivative
Intercommodity Spread
Option
Over-The-Counter - OTC
Spark Spread
Spread
Vertical Spread |