The Bull Call Spread option strategy has good reward to risk, and can be used if you are very bullish on a stock.


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Strategy: Bull Call , (ATM strike to 1 strike up)

a.k.a. Bull Call Spread, Bull Call Vertical

Bull Call Spread Option Graph

The Outlook: Very bullish. The stock must rise at least as much as your debit just to breakeven. The stock must rise more to show a gain.

The Trade: buy Call ATM and sell Call OTM.

Gains when: stock rises enough to overcome the initial debit.

Maximum Gain: difference in strike prices - initial debit.

Loses when: stock falls, does not rise, or does not rise enough.

Maximum Loss : limited to the initial debit.

Breakeven Calculation: Long Call strike + initial debit.

Advantages compared to stock: limited risk, less capital needed, greater leverage.

Disadvantages compared to stock: gains are limited to the upside if stock rises more than the sold strike, no dividends.

Volatility: after entry, increasing implied volatility is positive if the stock falls, but negative if the stock rises.

Time: after entry, the passage of time is positive if the stock rises, but negative if the stock falls.

Margin Requirement: None. The initial debit must be paid in full.

Variations: see the Vertical Spread Strategies page and the All Bull Call debit spread graphs page.

Synthetic Equivalent: Long Stock plus Long Put plus Short Call. (A "collar".)


  • This Bull Call can be used if you are very bullish on a stock, but want to reduce the cost of entry compared to just buying an ATM Long Call. This is especially true if the options have a higher-than normal IV. Just buying a long call puts you at a disadvantage in terms of the higher price caused by the higher IV. If you also sell a high IV call, you level the playing field.
  • The short call(s) will limit gains to the upside, so you don't want to be "too" bullish.
  • This Bull Call can be used to anchor trading in a stock you expect to be volatile above the long strike. For instance, after entering the position, you could take gains on the short calls whenever there is a volatile day to the downside, and sell the calls again whenever there is a volatile day to the upside. Every gain taken on short call buybacks reduces your risk by the amount of the gain. It is possible to end up with a zero risk long call, also known as a "free ride". This is by no means a guaranteed outcome.
  • This Bull Call can be used as part of a "stock enhancement" strategy. See the Stock Enhancement page.


  • Since this is a very bullish position, the trader is expecting the stock to rise. If the stock falls instead, the trader would be wise to cut his losses short. If the stock falls below the long strike and the time to expiration drops to just a couple weeks, you can see from the option graph that the loss will be less than the maximum, and it is probably best to take it. Just sitting and waiting could likely result in the maximum loss.
  • If the stock rises most of the way to the sold strike, the trader should stick with the position. As the option graph shows, just the passage of time is a benefit at any stock price near the sold strike.
  • If the stock rises over the strike you sold and you do not trade out of the position before expiration, it is possible to receive an automatic exercise on the long call, so you will buy the stock, and be assigned on the short call, so you will sell the stock short. See the Rules, Tips, & Techniques page for more.


  • It is not usually recommended to adjust one part of a Bull Call. If you take a trading profit on the short calls when the stock drops for instance, you are actually increasing your maximum risk. You might think you will sell the calls again the next time the stock goes up, but what if it doesn't?
  • It is possible to roll the entire bull call to lower strike prices if the stock drops, but that really amounts to closing one trade at a loss and opening another trade in hopes of a gain. Plus, the stock has not behaved bullishly yet you are taking a second bullish position.
  • If a bull call works out better than you expected and you want to stick with the stock, you can buy back the short calls, and exercise the long calls, so that you end up with just stock, with all the inherent risks and rewards.
  • Or if the stock rises to near the sold call strike with expiration near and you have made 80% or so of the total possible on the short calls, you can roll everything out to the next month, and higher strike prices, if you are still bullish on the stock.

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