1.   The TOM has a convenient set of jargon to describe the relationship between the security price and the exercise price.

2.   This is simply the security price minus the exercise price for calls.

3.   This aspect of option premiums may be seen more clearly if we look at calls and puts with the same exercise price but with different expiry dates.

4.   These are portfolios of written calls and puts or bought calls and puts with the same exercise price and expiry date on the same underlying security.

5.   It is also dependent on the exercise price and the option premiums.

6.   The bullish money spread consists of a purchased call with a low exercise price and a written call with a high exercise price.

7.   A call is written with a low exercise price to make the profit when prices fall as expected.

8.   As it has a low exercise price the premium will be high.

9.   The written call having the low exercise price starts to make a loss before the purchased call starts to make a profit.

10.   Three exercise prices are used.