Profit Calculation of Bull Put Spread:Maximum Return = Net Credit Following up from the above example 1: Sell to open 10 QQQQ Jan44Put for $1.85 per contract and Buy to open 10 QQQQ Jan43Put for $1.05 per contract Max. Return = $1.85 - $1.05 = $0.80 when QQQQ closes above $44 Ma...
Then we will perform the same assessment on Trader #2's bull call spread. Finally, we will put these two strategies side by side and review their respective benefits and trade-offs. Long call example To start, let's assume that XYZ is trading for $173.92 and trader #1 decides to ...
Bull-Put Credit Spreads... Bull Put Credit Spread Profit Loss Chart This bull put credit spreads strategy is to realize a profit by making cash that is a net credit formed by the difference in a SOLD PUT price and a BOUGHT PUT price. While the stock goes up, the investor keeps the ne...
Bull call spread and bull put spread payoff profiles are inverse tobear put spreadandbear call spread, which as their names suggest are bearish strategies (profit when underlying price goes down). The latter is actually the exact other side of bull call spread (you sell the lower strike call...
In this example: 10200 + 210= 10410 Bull Put Spread As the name suggests, this strategy is also used when the outlook on the market is bullish, and it uses put options. In this, a trader shorts a put with a higher strike price and buys one put with At the Money (ATM) lower strik...
For example, with a vertical bull call spread, you buy a call with a lower strike price and sell a call with a higher strike price. With a vertical bull put, you buy a put at a lower price and sell a put at a higher price. In either case, if you're right about the behavior ...
Breakeven = short put strike – premium received Example A 70-75 bull put spread valued at $2 would consist of selling a 75-strike price put and buying a 70-strike price put. Here the $2 premium would represent the max win if the stock stayed above the 75-strike price. Having a $5...
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A bull put spread involves writing or short selling a put option, and simultaneously purchasing another put option (on the same underlying asset) with the same expiration date but a lower strike price. A bull put spread is one of the four basic types ofvertical spreads- the other three bein...
Perceived risk is limited: Since this is adebit spread, the most the investor can lose with a bull call spread is the net premium paid for the position. The tradeoff for this limitedrisk profileis that the potential return is capped. Leverage is desired: Options are suitable whenleverageis ...