Bull Call Spread Options Strategy Builder & Analyzer Online

bull call spread calculator

The maximum profit for this spread will generally occur as the underlying stock price rises above the higher strike price, and both options expire in-the-money. The investor can exercise the long call, buy stock at its lower strike price, and sell that stock at the written call’s higher strike price if assigned an exercise notice. This will be the case no matter how high the underlying stock has risen in price. If the underlying stock price is in between the strike prices when the calls expire, the long call will be in-the-money and worth its intrinsic value. You might be familiar with the covered call options strategy, which can potentially generate and combine selling calls against the stock or ETFs an investor already owns.

How do you calculate call spread in profit?

  1. Maximum profit = $70 – $50 – $7 = $13.
  2. Maximum loss = $7.
  3. Break-even point = $50 + $7 = $57.

Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning. The dotted yellow lines represent a long call option and a short call option. Factoring in net commissions, the investor bull call spread calculator would be left with a net loss of $7. Factoring in net commissions, the investor would be left with a net gain of $3. The 7900 CE option also has 0 intrinsic value, but since we have sold/written this option we get to retain the premium of Rs.25.

What Is a Bull Call Spread?

The bull call spread consists of the following steps involving two call options. For executing this strategy you will need to pay full premium amount plus the margin for writing 1 lot of option. Here is something you should know, wider the spread, higher is the amount of money you can potentially make, but as a trade off the breakeven also increases. Generally speaking in a bull call spread there is always a ‘net debit’, hence the bull call spread is also called referred to as a ‘debit bull spread’. Spread strategy such as the ‘Bull Call Spread’ is best implemented when your outlook on the stock/index is ‘moderate’ and not really ‘aggressive’.

A long call spread gives you the right to buy stock at strike price A and obligates you to sell the stock at strike price B if assigned. Using a bull call strategy, you buy a call option, and sell the same number of higher striking call options.

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Bull call debit spreads have a finite amount of time to be profitable and have multiple factors working against their success. If the underlying stock does not move far enough, fast enough, or volatility decreases, the spread will lose value rapidly and result in a loss. Bull call spreads can be adjusted like most options strategies but will almost always come at more cost and, therefore, add risk to the trade and extend the break-even point. The time value of the long option contract decreases exponentially every day. Ideally, a large move up in the underlying stock price occurs quickly, and an investor can capitalize on all the remaining extrinsic time value by exiting the position. A bull call spread is exited by selling-to-close the long call option and buying-to-close the short call option. If the spread is sold for more than it was purchased, a profit will be realized.

bull call spread calculator

Here you are going to be trading two different months, but pinning the exact same strike price. Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab.

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Let’s assume that there are two traders who are equally bullish on XYZ in the near-term and intend to use options to potentially capitalize on that bullish forecast. This CORE advanced long call spread sample bot template is designed for traders who have a basic understanding of options trading and the autotrading platform. As far as credit spreads are concerned, they can greatly reduce the risk of writing options, since option writers take on significant risk to pocket a relatively small amount of option premium. One disastrous trade can wipe out positive results from many successful option trades. In fact, option writers are occasionally disparagingly referred to as individuals who stoop to collect pennies on the railway track. They happily do so—until a train comes along and runs them over. Should the stock increase to $61, the value of the $50 call would rise to $10, and the value of the $60 call would remain at $1.

bull call spread calculator

Plz tell me if there is any free tool available to calculate pay off and profit/loss or other things for option trading. Here are a bunch of graphs that will help you identify the best possible strikes based on time to expiry. Given all this there is a high probability that the stock could stage a relief rally. However you are not completely bullish as whatever said and done the stock is still in a downtrend. The Bull Call Calculator can be used to chart theoretical profit and loss (P&L) for bull call positions. Clicking on the chart icon on the Bull Call Screener/Bull Put Screener loads the calculator with a selected bull call or bull put position.

Max Loss

However, any further gains in the $50 call are forfeited, and the trader’s profit on the two call options would be $9 ($10 gain – $1 net cost). Buy a call option for a strike price above the current market with a specific expiration date and pay the premium. 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 primary benefit of using a bull call spread is that it costs lower than buying a call option. In the example above, if Jorge only used a call option, he would need to pay a $10 premium.

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