What is a call spread strategy?

This strategy allows investors to profit from a limited price movement in the underlying asset while managing their risk exposure. There are two main types of call spreads: vertical call spreads and horizontal call spreads. Vertical call spreads involve buying and selling call options with the same expiration date but different strike prices.

What is a horizontal call spread?

Horizontal call spreads, also known as calendar spreads, involve buying and selling call options with the same strike price but different expiration dates. This strategy aims to profit from the time decay of options premiums. Why Use Call Spreads?

What is a bull call spread?

A bull call spread is an options strategy used when a trader is betting that a stock will have a limited increase in its price. The strategy uses two call options to create a range consisting of a lower strike price and an upper strike price. The bullish call spread can limit the losses of owning stock, but it also caps the gains.

What is an example of a call credit spread?

An example of a call credit spread is when you sell a call option with a lower strike price and buy a call option with a higher strike price. For example, if a stock is trading at $100, you can sell a call option with a $105 strike price and buy a call option with a $110 strike price.