Trading Educators Blog
Mr. Ross, if I enter a spread long wheat and short corn, both for the same month is that a vertical spread? What if I spread March soybeans against November soybeans, is that a vertical spread?
Not really! Vertical spreads typically apply to options not to trading in the outrights. If you look at the definition of a vertical spread, you will see that neither of the spreads you described fit what is called a "vertical spread."A Vertical Spread options strategy involves the purchase of the same type of put or call option on the same underlying asset, with the same expiration date but with different strike prices. The term "vertical" comes from the position of the strike prices. In contrast to a calendar spread, which is the simultaneous purchase and sale of the same option type with the same strike but different expiration dates.
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