The Odds and Evens of Bull Call Spreads

A bull call spread is a well used options trading strategy that aims to lessen the upfront cost of buying call options so that investors can profit from stocks that are expected to rise moderately. Therefore if the underlying asset’s price rises, you are able to get profit.

One advantage of using Bull call spreads is that they are cheaper compared to buying call options. If the underlying asset fails to rise beyond the strike price of the out of the money short call option, you still get to earn a profit that is greater than what you usually earn when you buy calls.

There will also be more commissions involved compared to just simply buying call options. Aside from that, if the underlying asset rises beyond the strike price of the out of the money call option, there will be no more profits available. The main drawback identified is that your profit potential is limited.

Binary Digital Options Trading  tips that the profitability of this strategy can be enhanced and be guaranteed by legging into the position properly. Take note that you should use a bull call spread if you are confident in a moderate rise in the underlying asset.