BULL CALL SPREAD | bull strategy

Example: Buy 1 call; sell 1 call at higher strike
Market Outlook: Bullish
Risk: Limited
Reward: Limited
Increase in Volatility: Helps or hurts depending on strikes chosen
Time Erosion: Helps or hurts depending on strikes chosen
Break-Even Point (BEP): Long call strike plus net premium paid

The bull call spread option trading strategy is employed when the options trader thinks that the price of the underlying asset will go up moderately in the near term.

Bull call spreads can be implemented by buying an at-the-money call option while simultaneously writing a higher striking out-of-the-money call option of the same underlying security and the same expiration month.

By shorting the out-of-the-money call, the options trader reduces the cost of establishing the bullish position but forgoes the chance of making a large profit in the event that the underlying asset price skyrockets. The bull call spread option strategy is also known as the bull call debit spread as a debit is taken upon entering the trade.

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