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Profit Potential of Bull Call Spread :
This strategy reaches its maximum profit potential when the underlying stock closes at or exceeds the strike price of the OTM call options.
Profit Calculation of Bull Call Spread:
Maximum Return = (Difference in strikes - Net Debit) ÷ Net Debit
Risk / Reward of Bull Call Spread:
Upside Maximum Profit: Limited
Maximum Loss: Limited
Net Debit Paid
Break Even Point of Bull Call Spread:
BEP: Strike Price of Long Call Option + Net Debit Paid
Advantages Of Bull Call Spread :
Loss is limited if the underlying financial instrument falls instead of rise.
If the underlying instrument fails to rise beyond the strike price of the out of the money short call option, the profit yield will be
greater than just buying call options.
It is also a way of buying call options at a discount by selling the out of the money call option at a strike price beyond that which
the underlying instrument is expected to rise.
Disadvantages Of Bull Call Spread :
There will be more commissions involved than simply buying call options.
There will be no more profits possible if the underlying instrument or stock rises beyond the strike price of the out of the money call option.
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