Bull Call Spread

A bull call spread is one of the bullish options trading strategies that involves buying an At-The-Money (ATM) call option and selling the Out-Of-The-Money call option. One should note that both calls should have the same underlying stock and the same expiry date. In this strategy, a profit is made when the price of the underlying stock increases, which is equal to the spread minus the net debit, and a loss is incurred when the stock price falls, equal to the net debit. The net debit corresponds to the premium paid for a lower base price minus the premium received for a higher base price. Spread refers to the difference between the higher and lower strike price. Bull call spread helps protect when prices fall and profit size is also limited.