Bull call spread and bull put spread. Say we are bullish on an underlying, and want to put on a vertical spread. Buying the lower strike and selling the higher strike is always bullish regardless of whether it is a call spread or a put spread. We've tended to use more bull call spreads (debit) on the site than bull put spreads (credit). Generally, we will use a bull call.

Bull call spread and bull put spread

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Bull call spread and bull put spread. Any preferences here on Buying Bull Call Spreads vs. Selling Bull Put Spreads for an Uptrending Stock? I've preferred Selling Bull Put Spreads because.

Bull call spread and bull put spread


Sometimes you like a stock but don't love it. Bull spreads were made for this situation. They use options to profit from a higher or steady stock price but are hedged — by way of spreads with offsetting positions — to limit gains and losses.

Bull spreads involve two options with different strike prices but the same expiration date. Option buyers have the right to buy or sell shares of underlying stock at a specific price — the strike price — on or before the option expiration date. Put buyers can sell shares at the strike price, but this only makes sense if the strike price is higher than the stock price. The put seller, who receives a cash premium in advance for the put sale, is also the stock buyer if the put buyer exercises the option.

The reverse holds for calls. The call buyer can buy shares at the strike price but does so only if the strike is below the stock price. The call seller collects a premium but must supply the shares if the call buyer exercises the option. In three months, three possible outcomes exist. Puts work in the opposite way. Consider three outcomes to determine your gains or losses. On the put spread, you receive money up front but spend cash to buy the call spread. A call spread requires an upward price movement, so use it when you're moderately bullish.

The put spread doesn't require the stock to move higher. Based in Chicago, Eric Bank has been writing business-related articles since , and science articles since His articles have appeared in "PC Magazine" and on numerous websites. He holds a B. He also holds an M. Puts and Calls Option buyers have the right to buy or sell shares of underlying stock at a specific price — the strike price — on or before the option expiration date.

Differences On the put spread, you receive money up front but spend cash to buy the call spread. Long Calls Leavitt Brothers: Bull Call Spread vs. Bull Put Spread by ChartSpeak. About the Author Based in Chicago, Eric Bank has been writing business-related articles since , and science articles since


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