Debit Spread Law and Legal Definition

Debit spread is a spread option position in which the price of the option bought is greater than the price of the option sold.

A trader is said to have "purchased" the "debit spread" when the price paid for the long position is less than the price received for the short position so that the trader's account shows a debit. [Andros v. Commissioner, T.C. Memo 1996-133 (T.C. 1996)].