Bull Call Spread (Debit Call Spread)

A bull call spread, also known as a debit call spread, is an options strategy employed by investors who have a moderately bullish outlook on an asset. The strategy involves simultaneously buying a call option at a lower strike price and selling another call option at a higher strike price, both with the same expiration date. The initial cost of entering this spread is a net debit—hence the name—because the premium paid for the lower strike call exceeds the premium received from selling the higher strike call.

The primary goal of a bull call spread is to profit from a rise in the underlying asset’s price, but with limited risk and capped reward. The maximum profit is realized when the underlying asset closes at or above the higher strike price at expiration, in which case the spread between the two strike prices minus the net premium paid is retained as profit. The maximum loss is limited to the net premium paid to initiate the trade, which makes it an attractive strategy for risk-conscious traders.

This spread is particularly useful in scenarios where investors anticipate modest upside movement and want to reduce the cost of buying a call outright. However, the trade-off is the capped profit potential due to the short call leg. Bull call spreads are popular among retail and institutional investors alike because they combine directional bias with risk control and are easy to execute using standard trading platforms.

Bull Call Spread (Debit Call Spread)

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