Bull Call Spread Guide

The Bull Call Spread is used when you are moderately bullish on an asset. It involves buying an In-the-Money (ITM) call and selling an Out-of-the-Money (OTM) call.

Why use it?

It reduces the cost of entry compared to buying a naked call and mitigates the impact of time decay.

Step-by-Step

• Buy Strike A (Lower strike)
• Sell Strike B (Higher strike)

Pros and Cons

• Pros: Lower cost, lower break-even.
• Cons: Profit is capped if the market rallies significantly.