bull call spread


A strategy in options trading in which an investor purchases call options at a lower in-the-money strike price while simultaneously selling shares of the identical asset at a higher out-of-the-money strike price. Since the long call option costs more than the short call option, the investor starts at a small debit.

This is a vertical spread trade because both options must share the same expiration date. The maximum profit in this trade is the spread between the lower and higher strike price, minus the initial debit from purchasing the long call option, whereas the maximum loss is simply the initial debit.

Related Terms

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
bull bond iron condor