Options Strategies

1. Bull Call Spread –

Meaning: -
A bull call spread is an options trading strategy designed to benefit from a stock's limited
increase in 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 helps to limit losses of
owning stock, but it also caps the gains. Commodities, bonds, stocks, currencies, and other
assets form the underlying holdings for call options.

How it works: -
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 bull call spread reduces the cost of the call option, but it
comes with a trade-off. The gains in the stock's price are also capped, creating a limited
range where the investor can make a profit. Traders will use the bull call spread if they
believe an asset will moderately rise in value. Most often, during times of high volatility, they
will use this strategy.

The bull call spread consists of steps involving two call options.

 Choose the asset you believe will appreciate over a set period of days, weeks, or
months.
 Buy a call option for a strike price above the current market with a specific
expiration date and pay the premium. Another name for this option is a long call.
 Simultaneously, sell a call option at a higher strike price that has the same expiration
date as the first call option. Another name for this option is a short call.

By selling a call option, the investor receives a premium, which partially offsets the price
they paid for the first call. In practice, investor debt is the net difference between the two
call options, which is the cost of the strategy.

Example: -
Mr. A is looking at Google and feels it is likely to rise, CMP of Google is $700 and he don’t
want to spend 700$. He Buys call option @10$ premium for Strike Price 700 and sell call
option @5$ strike price of 720$.