Bull Call Spread
Bull Call Spread – Buy ATM (lower strike price) Call and sell OTM (higher strike price) Call with 45 days or greater until same expiration date in moderately Bullish markets that are trending up.
Entry Rules
Bullish expectations for the underlying asset.
Pay no more than $2 for a $5 spread, and $4 for a $10 spread, including commissions.
Exit Rules
- Close position if it falls to 60% of purchase price.
- Close position 30 days to expiration.
- Evaluate position at 90-100% profit.
If you are still Bullish, close 50% of position to take your money off the table.
Close out the remainder of position at 75% – 80% of maximum spread.
Profit & Loss Calculations
Maximum Risk – Limited to the net debit paid for the spread
Maximum Profit – Limited to difference in strike prices – net debit paid
Breakeven – Lower Call strike price + net debit paid
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