Bull Call Spread
A Bull Call Spread is an options trading strategy designed to benefit from a stock's limited increase in price. A Bull Call Spread strategy involves taking two positions of buying a Call Option and selling a Call Option.
When to use Bull Call Spread strategy?
Moderately Bullish
The Trade
Buy a call and sell a higher strike cheaper call to reduce the premium. Or you can Buy ITM Call Option and Sell OTM Call Option.
Pros
• Cheaper than buying a call.
• Pay only for the limited upside you want.
• Less Theta and lower IV risk.
Time and Volatility
• Loses a little time value every day
• Gains moderately if IV goes up
Max Loss: Net premium
Max Profit: Strike difference - Net premium
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