Vertical Spread

A vertical spread is formed when you buy and sell options of the same category in the same month, but with different strike prices.

For instance if I buy a November $80 call for $5 and sell a November $75 call for $7 I have just created a vertical spread. This is one of the preferred trading strategies for professional investors. It is important to remember that you do not necessarily have to sell the options in the front month. You can always sell or more months away. Options

Of course if you are trying to take advantage of option selling the further away you sell the options the more time you are giving the stock to move against you and the higher potential risk you could have.