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Bull Spread Calculator

20 May Bull Spread Calculator


This is the risk-defined benefit often discussed as a reason to trade options. Whether the stock falls to $5 or $50 a share, the call option holder will only lose the amount they paid for the option spread ($42). A covered call will protect you against rapid increase in stock price.

premium of $

If you were entering the trade in your brokerage platform as a spread, this is the price you should enter to start with as it is the mid-point of the spread. The downside of this method is that in an uptrend volatility will be low meaning lower option premiums. Long 3 contracts of 45 strike call option, bought for 4.38 per share. This millionaire calculator will help you determine how long it will take for you to reach a 7-figure saving or any financial goal you have.

Stock Repair Option Strategy

Using a how to change your career with a blog put strategy, you sell a put option, and buy the same number of lower striking put options. The puts are for the same underlying stock, expiring in the same month. Options trading entails significant risk and is not appropriate for all investors. Before trading options, please read Characteristics and Risks of Standardized Options. Supporting documentation for any claims, if applicable, will be furnished upon request.

  • The position sizes of the long and short call option should be the same, only with opposite signs (+3 contracts for leg 1 and -3 contracts for leg 2).
  • Therefore, if the stock price is above the strike price of the short call in a bull call spread , an assessment must be made if early assignment is likely.
  • The easiest way to create a bull call spread position is to select “Bull Call Spread” in the strategy selection dropdown box in cell E6.
  • Whether the stock falls to $5 or $50 a share, the call option holder will only lose the amount they paid for the option spread ($42).

The risk is equal to the cost of the spread including commissions. A loss of this amount is realized if the position is held to expiration and both calls expire worthless. Both calls will expire worthless if the stock price at expiration is below the strike price of the long call . A bull call spread consists of one long call with a lower strike price and one short call with a higher strike price.

Bull spreads achieve maximum profit if the underlying asset closes at or above the higher strike price. A bull spread is an optimistic options strategy used when the investor expects a moderate rise in the price of the underlying asset. Search a symbol to visualize the potential profit and loss for a bull put spread option strategy. The next two columns, H and I, show the value and profit or loss at given underlying price at expiration. The underlying price is entered in the yellow cell I6; in our example it is $47.67. If the underlying ends up at this price when the options expire, the $45 strike calls will be in the money and worth $801 (2.67 x 3 x 100 in cell H9).

Small Account Option Strategies

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. A bull call spread is a bullish strategy that consists in having two call contracts. First, you buy the long call with a strike price, let’s say S1, and immediately afterward, you acquire a short call with a strike price of S2.

underlying price

For the bull call spread, you pay upfront and seek profit later when it expires. For the bull put spread, you collect money upfront and seek to hold on to as much of it as possible when it expires. A bull put spread is a bullish strategy also referred to as a credit spread due to the fact that you receive option premium after placing the trade. When trading bull put spreads it’s important to know your maximum risk and potential profits. In this bear put spread example, you profit if the stock price falls and ends below the breakeven price. A strong bearish signal of the company’s current status is when the operating cash flow starts to decrease.

The publishers are not responsible for any errors or omissions contained herein or delivered through the software. Data and functionality of this software is subject to many factors including but not limited to internet connectivity, data interruptions, server breakdowns, trading halts etc. Real-time data subscriptions available through our data partners and require additional exchange subscription agreements. The reader should consult a professional financial advisor to determine their suitability for any strategies discussed herein. Multi-strategy bot that uses technical indicators to determine trend and hedging to cover outstanding risk. Bot sells ATM put spreads M/W/F morning when in an uptrend and will also sell call spreads to hedge.

Stock Option Calculators

An options trader buys 1 Citigroup June 21 call at the $50 strike price and pays $2 per contract when Citigroup is trading at $49 per share. The broker will charge a fee for placing an options trade and this expense factors into the overall cost of the trade. So, buying one contract equates to 100 shares of the underlying asset. An expensive premium might make a call option not worth buying since the stock’s price would have to move significantly higher to offset the premium paid. Called the break-even point , this is the price equal to the strike price plus the premium fee.

This way, you can compare the bull call spread to a $45 strike long call , to a ladder or ratio spread. For setup, you can use the buttons below the alternative position to clear alternative position, copy one position to another, or switch the two positions. We will start by explaining what an option spread is, and then move on to discussing the concepts of credit spread and debit spread option, and wrap up with some examples. Using a bull call strategy, you buy a call option, and sell the same number of higher striking call options. The calls are for the same underlying stock, expiring in the same month.

The maximum loss a trader can incur when using this strategy is equal to the difference between the strike prices minus the net credit received. A bull spread is an optimistic options strategy designed to profit from a moderate rise in the price of a security or asset. Whether a put or a call, the option with the lower strike price is bought and the one with the higher strike price is sold. The term “bull spread” refers to the options strategy designed to earn profit from a moderate increase in the underlying security price.


In percentage terms, the bull call spread is 30% cheaper than purchasing only the call option. Moreover, if the trader is exceptionally bullish and thinks the stock will move up to $60, then the trader should just buy a call rather than purchase a Bull Call Spread. Breakeven price is the price which is premium less than the current stock price. In this article you will learn how to create your own excel spreadsheet for analysing option strategies.

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In practice, however, choosing a bull call spread instead of buying only the lower strike call is a subjective decision. Bull call spreads benefit from two factors, a rising stock price and time decay of the short option. A bull call spread is the strategy of choice when the forecast is for a gradual price rise to the strike price of the short call. While the long put in a bull put spread has no risk of early assignment, the short put does have such risk. Early assignment of stock options is generally related to dividends, and short puts that are assigned early are generally assigned on the ex-dividend date. In-the-money puts whose time value is less than the dividend have a high likelihood of being assigned.

Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Also, see our guide to understanding the basics of reading candlestick charts and option trading strategies.

Bull Put Credit Spreads Screener

It is important for a company to closely monitor changes in their bonds’ credit spread to limit credit spread risk. A lot of people are trading bull put spreads these days so I wanted to share my bull put spread calculator that I use to evaluate these trades. The long put has a higher premium to pay in the bear put spread, whereas the short put will have a lower premium to collect. It is a bearish strategy meaning you will profit from a stock fall in price. Here you will have to sell a call option with a lower strike price and to buy a call option with a higher strike price. Moneyness refers to the relative position of the underlying asset’s last price to the strike price.

If a short stock position is not wanted, it can be closed by either buying stock in the marketplace or by exercising the long call. Note, however, that whichever method is chosen, the date of the stock purchase will be one day later than the date of the stock sale. This difference will result in additional fees, including interest charges and commissions. Assignment of a short call might also trigger a margin call if there is not sufficient account equity to support the short stock position.

Theta will exponentially lose value as the options approach expiration. The decline in value may allow the investor to purchase the options for less money than initially sold, even if a significant rise in price does not occur. A bull put spread consists of selling-to-open a put option and buying-to-open a put option at a lower strike price, with the same expiration date.

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