Options / Bull call spread
Payoff at expiry for a generic example with the stock at 100. Green is profit, red is loss, dashed lines are break-even prices.
You buy a call and sell a higher-strike call with the same expiry. The sold call lowers your cost and caps your gain.
When it is used: When you expect a moderate rise and want a cheaper trade than a single call.
Main risk: You lose the net cost if the stock finishes below the lower strike. The gain stops at the higher strike.
- Net cost
- $300 per contract
- Max gain
- +$700
- Max loss
- -$300
- Break-even
- 103.0
- Legs
- 2
The legs in this example
| Action | Contract | Strike | Example price |
|---|---|---|---|
| Buy | 1 call | strike 100 | $4.50 per share |
| Sell | 1 call | strike 110 | $1.50 per share |
The Greeks for this strategy
The Greeks measure what moves the price of an option. The values below are model estimates for the generic example (stock at 100, 40% volatility, three months to expiry), only to show the direction of each effect.
| Greek | What it measures | This example | What it means here |
|---|---|---|---|
| Delta | How much the position gains or loses for a $1 move in the stock, per 100 shares. | +19 shares | Gains when the stock rises. |
| Gamma | How fast delta changes as the stock moves. | +0.13 | Little change in delta. |
| Theta | Value gained or lost each day from time passing, all else equal. | -0.28 $/day | Time has little effect. |
| Vega | Change in value for a one-point rise in implied volatility. | +1.27 $/pt | Barely affected by volatility. |
| Implied volatility (IV) | How much movement the market prices in per year. | 40% in this example | Higher IV makes options cost more. Positions with positive vega gain when it rises. |
Results for this strategy
We track our own hypothetical examples privately and publish each result at least 30 days after the play has closed, wins and losses together, once there are enough closed plays to say something. None have closed yet. This table will list every closed play with its expiry result and a link to the research it came from.
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