Options Glossary

Glossary: Net-Short Setup

Last Updated: March 18, 2017


Net-Short Setup

What Does Net-Short Setup Mean in Options Trading?

A Net-Short Setup is any options trading position which has a higher value of short contracts vs. long contracts in your spread. When these positions are opened, the trader will be paid a credit.
Generally, Net-Short Setups form non-directional or slightly-directional trades.  With these types of trades, the trader's goal is for the short options to stay out-of-the-money in order to take advantage of time decay on the options premium. The position may either be repurchased before the expiration date to close and lock in profits/losses, or held until expiration in order to realize the maximum profit potential.

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