Bull Call Spread: Moderately Bullish
When you think market will go UP, but you want to reduce cost and lock profit.
The Setup
- Buy ATM Call (e.g., 22,000 CE at ₹100).
- Sell OTM Call (e.g., 22,200 CE at ₹40).
The Math
Net Debit (Cost): 100 - 40 = ₹60.
So instead of risking ₹100, you are only risking ₹60.
Trade-off: Your profit is capped at 22,200. If market goes to 23,000, you don't earn extra.
Why use it?
It reduces the effect of Theta. Since you Sold an option too, its decay helps offset the decay of your Bought option.
*Disclaimer: NSE/BSE frequently revise Lot Sizes and Expiry Days (e.g., SEBI Circulars 2024/2025). Always check the latest circular on nseindia.com before trading.
Standard Disclosure: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. The content provided here is for educational purposes only and does not constitute financial or investment advice. AlgoStraddle Academy is not a SEBI registered investment advisor. Trading options involves high risk and capital can be lost.