What is the meaning of Bull Spread?

Bull Spread refers to a strategy in options trading where profits are maximised if the price of the underlying security goes up. The Spread is created by both puts and calls at various strike prices. The option is purchased at a lower strike price and is sold at a higher strike price. Usually, the call option with lower strike price is at-the-money while the one with the higher strike is out-of-the-money. The expiration date should be same for both call options.

 


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