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Bull Call Spread Profile Version / Simplified Version / Comprehensive Version

Purpose Of Bull Call Spread
1. To Profit From Rising Stocks
2. To Reduce Cost Of Call Options


Expectation Of Bull Call Spread
UP


Type Of Spread
Debit Spread


How To Use Bull Call Spread?
Buy At The Money (ATM) Call Option while simultaneously selling an equal number of Out Of The Money (OTM) Call Option.

Buy ATM Call Option + Sell OTM Call Option 		Bull Call Spread Risk Graph Learn How To Read This Chart


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.

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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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