how the bull call spread works
since a bull call spread involves writing a call option for a higher strike price than that of the current market in long calls the trade typically requires an initial cash outlay the investor simultaneously sells a call option aka a short call with the same expiration date in so doing he gets a premium which offsets the cost of the first long call he wrote to some extent the maximum profit in this strategy is the difference between the strike prices of the long and short options less the net cost of the options in other words the debit the maximum loss is only limited to the net premium debit paid for the options a bull call spread s profit increases as the underlying security s price increases up to the strike price of the short call option thereafter the profit remains stagnant if the underlying security s price increases beyond the short call s strike price conversely the position would have losses as the underlying security s price falls but the losses remain stagnant if the underlying security s price falls below the long call option s strike price the daily trading volume of all u s options markets as of dec 22 2023 2