Call Spreads (Vertical)
Chapters in this video
What this video covers
- How a bull call spread buys the lower strike and sells the higher strike for a net debit and moderately bullish outlook
- How to calculate net debit, maximum gain, maximum loss, and breakeven for a bull call spread
- Why bull call maximum gain equals the spread width minus the net debit, while maximum loss equals the debit paid
- How a bear call spread sells the lower strike and buys the higher strike for a net credit and moderately bearish outlook
- Why bear call maximum gain equals the credit received, while maximum loss equals the spread width minus the credit
- Why both vertical call spreads use the same breakeven formula: lower strike plus net premium
- How to identify the strategy from the lower strike and use the error check that maximum gain plus maximum loss equals the spread width
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