Could someone elaborate on “debit spread with the result of a net long position”
Where is this, exactly?
I’m so sorry. Forgot to mention, this is in the derivatives strategies, bull, bear and calendar spreads. "If a spread requires a net cash outflow, this is generally known as a debit spread with the result of a net long position…
An example would be if you have the same strike price on a call and a put. Let’s say you have a straddle strategy and you want to buy the $15 April 2018 calls @ $0.25 and you write the $15 April 2018 puts @ $0.50. You essential get $50 per contract for writing the puts and pay $25 per contract for buying the calls. Let’s assume 10 contracts.
Write puts: ($0.50*100)(10) = +$500
Buy Calls: ($0.25*100)(10) = -$250
After everything is done, you are credited $250 for the trade. $500 - $250 = $250
I think what you’ve calculated is net cash inflow. I guess it just means you bought something and hence net long position.