A Bull spread is an option strategy in which maximum profit is attained if the underlying security rises in price. Either calls or puts can be used. The lower strike price is purchased and the higher strike price is sold. The options have the same expiration date.
You make a lot of money if the stock rises. You lose it all if it doesn’t. It’s one of those higher risk maneuvers that can cause a lot of anxiety.
A bull spread option strategy is used by the option trader who is looking to profit from an expected rise in the price of the underlying security.
Vertical Bull Spreads
The vertical bull spread is a vertical spread in which options with a lower striking price are purchased and options with a higher striking price sold. Depending on whether puts or calls are used, the vertical bull spread can be established with a credit or a debit.
Bull Put Credit Spread
A vertical bull spread can be established for a credit if put options are used. The strategy is also known as the bull put spread.
Bull Call Debit Spread
A vertical bull spread can be established for a debit if call options are used. The strategy is also known as the bull call spread.
Horizontal & Diagonal Bull Spreads
The bull calendar spread and the diagonal bull spread are both time spread strategies used by option traders who believe that the price of the underlying security will remain stable in the near term but will eventually rise in the long term.