A money spread involves buying and selling call options in the same stock with
A) The same time period and exercise price.
B) The same time period but different exercise price.
C) A different time period but same exercise price.
D) A different time period and different exercise price.
E) Options in different markets.

Question

Quizplus · Accepted Answer

A money spread is a type of options trading strategy that involves buying and selling call options in the same stock with different exercise prices but the same expiration date. This is done to take advantage of differences in the implied volatility of the options. Therefore, the correct choice is B, which involves buying and selling call options with different exercise prices but the same time period, which fits the definition of a money spread. The other choices do not meet the requirements for a money spread.

A Money Spread Involves Buying and Selling Call Options in the Same