Comments on: What is a Bull Call Spread?

By: Derek Clark

Derek Clark — Thu, 28 Oct 2010 19:10:24 +0000

Note that the idea behind this is exactly the same as writing a covered call. The difference being you don’t own the stock, you just own a lower priced call. The leverage allows you (in theory) to make a higher percentage than you would with the covered call. Obviously the risk is higher to balance this out.

By: Derek Clark

Derek Clark — Thu, 28 Oct 2010 16:12:14 +0000

I’ll see if I can come up with something specific to these examples. This page – http://www.optionseducation.org/strategy/bull_call_spread.jsp – has a generic graph that should give you the idea. The basic principle is that you are lowering your breakeven and risk, but you cap the upside potential.

By: Evan

Evan — Thu, 28 Oct 2010 15:27:18 +0000

I have never heard of this move, but I am a novice when it comes to options. I only play around with covered calls.

Any chance you can turn this into a graph?