A Bull Call Spread (or Bull Call Debit Spread) strategy is implied for investors who are moderately bullish on the market and are anticipating a mild rise in the price of the underlying stock. It is a directional strategy
A bull call spread consists of one long call with a lower strike price and one short call with a higher strike price. Both have the same stock and expiry date. In this strategy profit & loss were predefined.
The cost of placing the sell order will be low because of the long position we had already
Bull Call Spread – Maximum profits
In the bull call spread options strategy, the maximum profits are calculated as below
- Maximum Profit = spread -net debit
Where Spread is the difference between the higher and lower strike price and Net debit is the premium paid for lower strike price-premium received
- Maximum Profit Gained When Price of Underlying >= Strike Price of Short Call
Bull Call Spread – Limited Downside risk
In the bull call spread strategy, the maximum loss is calculated as below
- Maximum Loss = Net debit(premium paid for lower strike price-premium received)
- Maximum loss occurs when the price of underlying <= Strike Price of Long Calls
Bull Call Spread – Break-Even Point
This formula can be used to calculate the price at which break-even is gained for the bull call spread position.
- Break-Even Point = Strike Price of Long Call + Net debit
How to make a Bull call spread Strategy in intraday screener?
Using the Options strategy builder feature in the intraday screener website, you can easily make an option strategy for a bull call spread. Here is the simple step by step process to make bull call spread.
Step 1: You just need to select the indices and expiry date (one buy call option and one sell call option) and click on add/edit to get started.
Step 2: Click on the Bull call spread strategy below.
Step 3: You will get detailed information on the option strategy like Premium, Max profit at expiry, Max losses at expiry, Breakeven at expiry and a Bull call spread graph.