Bull Call Spread Option Trading Strategy

If you see a stock that you think will move but you aren't sure how far you see the move going then a bull call spread might be the right option strategy for you. What is a bull call spread and how does it take advantage of this move?

A bull call spread is when you buy an out of the money call option and sell a call that is farther out of the money. For instance if the stock is at 20 you could buy to open the 25 call and sell to open the 30 call.

The reward on this trade is limited but so is the risk as you can only lose the money invested in the call minus the money earned off of the call you sold. So when would you use this strategy? You would use it whenever you think that the stock is going to move but you are not confident that it will move very far.

Bull call spreads are great for limiting and defining your risk in a bullish manner. They also have a higher chance of working out then a straight long call because you are offsetting some of the cost and you don't require or even care if the stock moves farther then the slightly out of the money call.

Trade Hard and Be Happy,
Bull Call Spread Traders