The Bull Spread approach gains from upward price movement and offers some protection in the event that the security price declines.
What is bull spread?
A bull spread is a bullish options strategy that seeks to gain from a modest increase in a security or asset's price. Bull spreads, a type of vertical spread, entail the concurrent purchase and selling of call or put options with various strike prices, but the same underlying asset and expiration date. The option with the lower strike price, whether it be a put or a call, is purchased, and the option with the higher strike price is sold.
Because the deal results in a net debt to the account when it is opened, a bull call spread is also known as a debit call spread. The option bought is more expensive than the option sold.
A bull call spread is the name of the strategy if call options are used. It is referred to as a bull put spread if put options are used. The time of the cash flows is what distinguishes the two practically. You pay in advance and seek profit when the bull call spread expires. With a bull put spread, you make an upfront profit and try to hang onto as much of it as you can until it expires.
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