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Box Spread

Trading Term

An option strategy that involves simultaneously buying and selling two synthetics in identical numbers at different strike prices. A box spread includes a long call and a short put at one strike price, and a short call and a long put at another strike price. For example: Buy 1 April02 95 call, Sell 1 April02 95 put, Sell 1 April02 100 call, Buy 1 April02 100 put. Long Box Spread Buy a long call and a short put with the same strike price and sell a long put and a short call with the same strike price. In a long box spread, the buy side strike price is lower than the sell side strike price. All components must have the same expiry and underlying. Short Box Spread Buy a long call and a short put with the same strike price and sell a long put and a short call with the same strike price. The buy side strike price is higher than the sell side strike price. All components must have the same expiry and underlying.

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