What does an option spread means ?

Option spreads are a fundamental building block for option trading strategies. Option spreads are created when you simultaneously buy and sell options with the same expiry and underlying. Different strike prices are used for different options. Spreads made with Call Options are called Call spreads, while those using Put Options can be called Put spreads.

These spreads can be used to reduce their investment cost. You pay a premium to buy Option, but you also receive a premium to sell Option. Your net premium will be less. Spreads can also be used to minimize risk and limit losses.