Snapshot
Legs
Buy 1 Lower-Strike Call + Sell 1 Higher-Strike Call
Outlook
Moderately Bullish
Max profit
Difference between strike prices minus net debit paid
Max Loss
Net debit paid
A bull call option strategy, also known as a bull call spread, involves buying a call option at a lower strike price and selling another call option at a higher strike price on the same stock with the same expiration date. You pay an upfront net debit because the call you buy costs more than the call you sell. Traders use this strategy when they expect a moderate rise in the stock price.
The maximum profit is limited to the difference between the two strike prices minus the net debit paid, realized if the stock price closes at or above the higher strike price. The maximum loss is capped at the initial net debit paid, occurring if the stock stays below the lower strike price through expiration.
Example
Stock
$100
Trade
- Buy $100 Call for $4.00
- Sell $105 Call for $1.50
→ $2.50 debit ($250)
Breakeven
$102.50
Outcomes
- Stock ≥ $105: +$250 Max Profit
- Stock at $102.50: $0 Breakeven
- Stock ≤ $100: -$250 Max Loss