bear spread


bear spread
In most commodities and financial instruments, the term refers to selling the nearby contract month, and buying the deferred contract, to profit from a change in the price relationship. Chicago Board of Trade glossary
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Sale of a near month futures contract against the purchase of a deferred month futures contract in expectation of a price decline in the near month relative to the more distant month. Example: selling a December contract and buying the more distant March contract. The CENTER ONLINE Futures Glossary
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Applies to derivative products. strategy in the options or futures markets designed to take advantage of a fall in the price of a security or commodity. A bear spread with call options is created by buying a call option with a certain strike price and selling a call option on the same stock with a lower strike price (with the same expiration date). A bear spread with put options is where an investor buys a put with a high strike price and sells a put with a low strike price. With futures, the investor sells the nearby contract and purchases the next out contract. All of these strategies are designed to profit from a fall in the underlying asset's price. Bloomberg Financial Dictionary
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A vertical spread involving the sale of the lower strike call and the purchase of the higher strike call, called a bear call spread. Also, a vertical spread involving the sale of the lower strike put and the purchase of the higher strike put, called a bear put spread. Chicago Mercantile Exchange Glossary
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An example of a vertical spread, constructed by the purchase of a high strike call ( call option) (or put ( put option)) and the sale of a low strike call ( put), both options being on the same underlying and having the same delivery month. Entered into when moderately bearish. Dresdner Kleinwort Wasserstein financial glossary

Financial and business terms. 2012.

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