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(1) Any complex position including at least one separate or embedded net long option position which causes the entire position to increase in value in response to a significant price or rate move up or down. (2) A vertical or diagonal option spread with net premium received, usually because the short option is further in the money or less out of the money than the long option. Also called Credit Spread (2). (3) A reverse option hedge or any variable or ratio spread where more option contracts are purchased than sold. (4) An arbitrage relationship in which the spread between the two prices or rates is less than the normal spread.
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