Long Leg

Long Leg

The part of an option spread strategy that involves buying an option on the underlying asset. A basic option spread strategy involves the purchase and simultaneous sale of an option (a put or call) on an asset such as a stock. Since the purchase of a put or call in such a spread amounts to "going long" on the option, it is called the long leg of the spread. Similarly, as the sale of a put or call in such a spread amounts to "going short" on the option, it is called the short leg of the spread.

MARGIN: 0in 0in 0pt; LAYOUT-GRID-MODE: char">For example, consider a bull call spread on a stock trading at $25. This spread would involve buying a call option at a strike price of say $26, and the simultaneous sale of a call option at a higher strike price, say $27. Both options would have the same expiration date. In this case, the $26 call constitutes the long leg of the spread, while the $27 call makes up the short leg.


Investment dictionary. . 2012.

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  • long leg — noun : a fielding position in cricket on the leg side relatively far from the batsman; also : a player fielding in this position compare short leg; see cricket illustration * * * long leg noun (cricket) A fielder, or a fielding position, on the… …   Useful english dictionary

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