What Does Debit & Credit Mean?

[youngsequan 10]

Hello Everyone,

 

I have never done a Strangle, I understand what it is

 

What I don't get is when I'm placing the order it gives me a choice of 'Market', 'Debit' or 'Credit'

 

What does 'Debit' & 'Credit' mean?

 

Thanks in advance

[SIUYA 11]

Always be careful here - as much like a bank account, a debit or a credit depends on who's account its for - is it your debit or credit or the banks. I have seen both methods, and so it can get confusing.

 

Usually when it comes to options (AND I ASSUME YOU ARE PLACING ORDERS IN THE EXAMPLE YOU ARE ASKING ABOUT) the general rule should be....

 

If you have to pay for some thing in terms of an outlay from you for the premium then its a debit.

If you are a net receiver of premium, and your cash account goes up, then its a credit.

 

Now with the market option it seems that you set the longs and shorts for the option series and strikes you require and then hit the market button and it will cross all the spreads for you automatically giving you the market price. (it may be a debit or a credit)