Definitions for "BULL CALL SPREAD"
In the Trade Finder, a vertical debit spread using calls only. This is a net debit transaction established by buying a call and selling another call at a higher strike price, on the same underlying, in the same expiration. It is a directional trade where the maximum loss = the debit paid, and the maximum profit = the difference between the strike prices, less the debit. No margin is required.
Buying a call option and selling another call option, both with the same expiry date. The call option sold usually has the higher strike price. The money paid buying the call option, is offset with the money received for selling the other call option. Losses are capped, as are profits.
A strategy in which a trader buys a lower strike call and sells a higher strike call to create a trade with limited profit and limited risk. A rise in the price of the underlying increases the value of the spread. Net debit transaction; Maximum loss = debit; Maximum gain = difference between strike prices less the debit; no margin.