Debit Spread
An options spread where the premium paid for buying options exceeds the premium received from selling options, resulting in a net debit.
Explanation
Debit spreads are directional strategies that cost money to enter but offer a defined-risk way to speculate on price movement. The maximum loss is the net debit paid, while the maximum profit is the width of the spread minus the debit. Common examples include bull call spreads and bear put spreads.
Example
Buy the 150 call and sell the 155 call on AAPL for a net debit of $2.00. Max profit is $3.00 if AAPL rises above $155.