According to OIC the definition of a spread is : "A position consisting of two parts, each of which alone would profit from opposite directional price moves. As orders, these opposite parts are entered and executed simultaneously in the hope of (1) limiting risk, or (2) benefiting from a change of price relationship between the two parts."

The definition given by Investopedia.com is simpler to understand: "An options position established by purchasing one option and selling another option of the same class but of a different series."

You have made two transactions usually at once and the purpose has been to use one stock option to protect the position of another option.

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