Bull Call Spread TUTORIAL [Vertical Spread Options Strategy]

[@projectfinance]

✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf

[@notes_from_under_ground]

It's incredible: In all of your videos I don't think you've ever blinked. Impressive.

[@projectfinance]

Haha only the older ones / first ones where I'm on the camera. These old vids are bad!

[@notes_from_under_ground]

@@projectfinance They're all very helpful dude, thank you!

[@notes_from_under_ground]

@@projectfinance Also, this is probably a stupid question, but in example 1, how is it that the 70 call expires worthless still if the stock price remains below the 70 strike? You want the stock to expire below the strike price when you sell a call option, right?

[@jackf498]

​@@notes_from_under_ground yes.... price IS below 70 so the call is therefore worthless because the stock price did not exceed 70.....ITS A CALL ,,SO PRICE NEEDS TO BE ABOVE THE STRIKE (70)TO BE WORTH ANYTHING...the call option is worthless to the person who bought it from you...

[@johneturbo]

@@jackf498 What happens if the call that you sell in the vertical spread also goes in the money do you have to sell 100 shares to who buys the call? I thought the maximum outlay is the cost of the vertical spread?

[@kevinp113]

I love how your videos are not too simple like most of what KZbinrs do. I actually learn stuff from your videos. Cheers.

[@projectfinance]

Thanks for your comment!

[@sheana2005]

This is a great explanation. I love how you walk through actual examples.

[@getahunalemu248]

R ed g

[@HighStakesBlackjack]

Thank you, thank you, thank you!!!.......Excellent video. I've been searching YT on this subject and trying to wrap my head around how bull call spreads work for over 2 weeks. Your video has finally explained this concept in laymen's terms and the light bulb has finally went off in my head! .......BTW, I also hit that ravishing "like" button (Sorry Charlie, ZipTrader) as well as the "subscribe" button.

[@projectfinance]

Awesome! Thanks so much for the comment. I'm glad the video was helpful. I'm all about trying to help people get to that light bulb moment! -Chris

[@carlosroman586]

Nice Video! Sorry for butting in, I would appreciate your initial thoughts. Have you heard about - Genevi Sonadelyn Eradicator (erm, check it on google should be there)? It is a good exclusive product for making money using this effective options system minus the headache. Ive heard some great things about it and my cousin at last got astronomical success with it.

[@brandonkawabata346]

Great examples and explanations!! This guy is El Profesor

[@armithel3133]

Thanks for the clear articulation, I didnt really understand options until this video, spreads look really really easy!

[@bballgtr]

Thank you for a no BS - super-secret strategy as so many firms tout these days. I want to learn and this video and some others on Vertical spreads are generally to the point! Thanks again!

[@StefanoOlla]

Loved this video. It is the most clear and well-explained I could find. The chart examples were key. Really good job!!

[@uclamutt118]

I just found your channel and have been binge watching your videos! You’re a really great teacher! Keep up the good work! Thanks!

[@projectfinance]

Thanks so much!

[@deshiusstocktrader8172]

You are option universe guru. Salute for sharing your wealth of knowledge

[@pattyaap7345]

Thank you for showing real time charts in your videos. Your content is great, charts just make it awesome!

[@projectfinance]

Thank you for the awesome comment!

[@JuanPablo-ki8qk]

Today I started watching the video from Argentina, fantastic! very well explained! Thank you so much

[@destorms]

Appreciate the full breakdown, finally saw a video or resource explains how expiration and closing works, thanks a lot!

[@kathywright4073]

Ok, I’m in for a three hour lesson! Looking forward to it!

[@armonkohan4271]

Thank you! Quick question regarding the when you buy a spread that is already in the money: Since you don't have to hold the position through expiration, can close your position that same day since maximum profit potential is attained? In this example FB only had to reach 175 for max profit, but it was already at 178.22, so what makes it to where you can't immediately close your position? Thanks!

[@brighambaker3381]

It took me a while to figure this out as well. You're paying more for that option than the option value, so you'll definitely want to wait for it to go up. The 49 strike call would only be worth the difference between the current price--57.47--and 49 dollars, so you wouldn't want to exercise the option, because it's only worth 8.47 right now, which is less than the 11.10 that you paid. It also works like an insurance policy against the one you sold if the stock takes a huge run. I hope that helps.

[@stangtrax]

NO, NO ,NO @17:49 if someone bought a 100 shares of stock they did not loose $4,500. People need to learn the difference in unrealized vs realized returns. I really appreciate your options videos and keep up the good work. I have the investing down pat. I am trying to learn more on options that is why I really like your channel.

[@projectfinance]

Well they did lose that much, even if they didn't realize it. The point was to compare the P/L of the spread to the 100 shares. Thanks for watching

[@lilstiggyandfriends7808]

Thanks for demonstrating getting in and getting out.

[@jefrox123]

Chris- THANK YOU!!!! You save me a lot of time from studying Options! great content!

[@jimkiser1429]

I subscribed to a couple paid services on a trial basis. However, this vid allowed me to comprehend buying a call spread perfectly, since it outlined three different strike selection strategies in the same video. My paid services, although claiming to be geared toward beginners, always got to a point that it was talking over my current knowledge. Interesting that, sometimes, free is better than paid. Thanks for this vid.

[@projectfinance]

I'm glad you found these vids!

[@SandeepKrishnappa]

Thank you! I have followed many other videos and blogs, nothing helped me to understand better than what you have demonstrated:)

[@shinhwang9225]

thanks for great video. How can I setup 75% profit limit on Call debit spread and put credit spread?

[@Theater1TV]

In 2 seconds I learned the difference between option and a regular trade. Thanks great video 📹👍

[@harism5589]

Great presentation!! Very useful Q and A.

[@sonaldeshpande1411]

Thank you for this video it's really helpful to understand Bull Call spread Strategy. I have a Question: In your previous video of Call Options Explained for Beginners, you mentioned when you short (sell) a call option then if Stock price goes down then you will get profit. Then how come in bull call spread you have short call and you will be in profit if stock price goes up ? can you please explain, both seems contradictory. Appreciate your response, Thank you in advance!

[@nnrq822]

When you go to close the position you must close both legs of the trade correct(As in one trade)?You cant close individual legs when they become profitable correct?Also can you close this trade at anytime before expiration?

[@benneely3164]

Really appreciate all the videos!

[@projectfinance]

Thank you!

[@moesadr3342]

One of the best videos I have seen so far. One quick question though, any idea as which option strategy could have the highest profit potential at its lowest loss potential?

[@geelinglim2146]

Thank you for your clear and very informative sharing. I have learnt so much from your videos.

[@sheddy8370]

Been studying your videos over the weekend (big fan of your videos) and started practicing with a paper money account today. Today I bought a TSLA 410/420 call spread for $1.70 expiring Sept 18 . Both my long call ($410) and short call ($420) closed ITM. The profit on the day is $305 but not yet 50% of the maximum profit of $830. What is the risk of letting the short call stay ITM towards expiration? What happens if the call holder exercises early? Do I need margin to cover? Or will I be able to offset the exercise with my $410 call? Wondering because my live account will start small and will only have a small amount of margin (Canadian too if that matters). Not enough funds to sell someone 100 shares lol. Curious about this. Thanks a lot!

[@robertz1962]

Dude, you're awesome!!! Thank you so so much!

[@miketoolami5394]

Thanks a lot, it was great explanation and visuals.

[@merajulislam2232]

Such a best video since i watching videos of options. Thank you so much boss.

[@papitapapito7530]

i enjoy the video very much, but one question: why wait for expiration? can I take my P/L anytime I want just like selling your stocks, your puts, calls anytime I want?

[@projectfinance]

Yes, you can take profits / close the trade whenever you want. You'd do that by selling the call spread you own (sell the long call, buy the short call) and you can do that in one transaction.

[@articho28]

Thank you for the video! Very well explained :) I have a question regarding the situation where you buy a spread that is already in the money: higher loss potential and lower profits but higher probability of being profitable at expiration. This may seem dumb from my part, but you mentioned earlier in the video that the owner of the spread does not have to hold the position through expiration but can sell as soon as the maximum profit potential is attained. In that case: how does it work if you purchase a spread that is already very close to reaching full profit like at @24.58 and want to exit? I'm sure I'm missing something. Thank you!

[@FVCK-]

For it to be that close to maximum profit already, that would mean the spread is very close. So the maximum profit wouldn’t be very high at all per contract. This would be used more as leverage if you’re not sure which direction the stock will go just yet, but want to get in without risking IV crush if it dives instantly if you just picked a regular call option. This particular type of option makes more profit when the spread is farther apart, and for that to reach maximum potential quickly would require a massive gap up. So if you think a gamma or short squeeze is coming this would be an option to use if the strike prices are juiced up but you still want in with less capital at risk.

[@TKFun-hc4rk]

Very clean, simple and excellent explanation!

[@samueljoseph6542]

You are my best Option Teacher.

[@projectfinance]

I'm glad to hear it! Thanks for watching my videos. -Chris

[@evalasman]

Best explanation about option spreads.

[@charlesstitchwong3124]

absolutely the best video i've seen on this topic. i finally understand. subscribed!

[@projectfinance]

Awesome, thank you!

[@ogchizzybeats4854]

I have a question on example 2. Why would someone buy a 575 call if the stock price is $569.92? Wouldnt that be considered out of the money? Should we focus on buying in the money calls and selling an out of the money call for bull call spreads?

[@mindixit1823]

Million thanks for explaining 👍

[@lilstiggyandfriends7808]

Could you explain a straight call without the spread? Is there a break even? What is the disadvantage? Greater profit?

[@Medess_stuick]

Thank you for the video. I really love your presentation I got interested after watching your beginner guide and every time I feel confused your great video provide a clear and easy to understand tutorial. Good Job

[@No1TasLis]

Great examples. Thank you!

[@dannytetreault]

That was amazing 🤩 !

[@mertyasar78]

I really enjoyed this video, your style is perfect, I like it ! Thanks a lot and good luck.

[@projectfinance]

Thank you! I'm glad you enjoyed the video. I appreciate the comment and viewership! -Chris

[@Twistedspine7]

I have question about when to sell you spread for profit. Is it common or wise to sell the call first for profit and then hold the short call to perhaps see maximum profitability if it expires worthless? Or is it best to just sell the spread together at once? I'd guess you could do both as it totally discretionary? Thanks

[@APLachel]

Great video. keep it up!

[@sc5922]

how do you calculate the spread price P&L with time decay in 10:58? is there a formula?

[@kkay8209]

I really enjoy and appreciate your videos. They are very informative. I just want to make sure I understand something. If I am trading a Bull Call Spread and the stock moves in the opposite direction of where I believed it would, and I hang on until expiration and do nothing, then I am only on the hook for my max loss correct? My understanding is on any of the vertical spread strategies you can never lose more than your premium or the spread difference less the premium, correct? In other words you will never have any surprises if the options expire and you do nothing.

[@RobertTaylor-im7el]

Great video! Any chance you could recommend a good options strategy book for advanced beginner?

[@Buckybarnesfan22]

Thank you for your informative and clear videos. You are able to make a difficult concept simple and easy to digest. Thank you!

[@lifeknow-science9275]

Bro, u r awsm, i learned a lot of ur channel , God bless u

[@projectfinance]

Thank you for the comment! More videos coming soon so stay tuned!

[@ricardomonge223]

my hero u are the best of all time

[@andrew_ng]

Very helpful video. So basically, once in the profit zone OR above max profit zone. We will just close both the buy and sell? Assuming we do not want to hold the stocks. Thanks

[@EagleSZN678]

Thank you for the video!! Best explanation that I've seen! With a call debit spread, because time decay doesn't negatively impact your profit, would it be more beneficial to wait until Wednesday/Thursday to buy a weekly spread? Seems like it would be cheaper but your profit would still be the difference between the strikes right?

[@ronniecarter3123]

Not always the case. The long call, being further in the money, will have less extrinsic value to decay away than the short call on the higher strike. Therefore, all other things being equal, you will generally find that the closer you are to expiration, particularly in those last few days, the same spread will cost you more to enter. OTOH, there may be less risk since there is not as much time left before expiration for things to go awry on you.

[@4a6vamsi]

Do u have any tricks to remember Max loss and max profit for all bull and bear strategies?Do u have formulae in one place for all strategies?

[@alexanderfrost2943]

Just like Rufus before me, thank you very very much. I really love your videos. I learned a lot from you.

[@santoshkumardosapati7266]

U don't disappoint us

[@Lestat103]

I entered a bull spread today on LCA with an expiration date in November. If you have a look at the numbers on expiration day, it looks pretty good. Let's say the stock moves from 17 to 24. At 24, you will make about 200% profit, but that's on expiration day 2 months away! At the same share price of 25, but a month prior to expiration - the profit gets cut in half due to the fact that short call still has significant extrinsic value. The ratio between the two is tighter, the spread is smaller. Moreover, if the stock goes to £25 in a matter of days, the profit gets cut down even more drastically, amounting to about 40% to what you would make at the same price on expiration day. These are my conclusions: 1. Unlike a normall call, the bull spread ages much better. You make more money as the calls decay. 2. Not good if a spike is expected, and then a pull down towards expiration. Any 'rules of thumb' of where to use bull spreads, and when not to?

[@jakobafeworiki1006]

bro i love u, u are so good at explaning

[@matthewlincoln7082]

This is helpful to all those newbis out there...Also I will be Recommending expert Robert Anderson for all the beginners who lost and will want to recover all their lost so far. I have been benefiting a lot from him and he also guided me on how to retain my earnings each year, tax information for trades, LLC and trading. Basically to avoid harsh taxes.

[@catherinepresley6683]

Wow, tax management is priceless.

[@cityprepping4660]

I have seen different recommendations about expert Robert, he must be very exceptional for people to talk about him like this. But I still have a bitter experience with this PROs

[@mildredlevine2691]

I'm a beginner in stock trading, Please how do I get informed about stock trading?

[@matthewlincoln7082]

@@cityprepping4660 Well said, but there are experts who dedicate their time and resources to study the different strategies and mastered them, this are people we should go for trading advice

[@matthewlincoln7082]

@@mildredlevine2691 As a newbie, it's best to avoid jumping in forex trade without expert guidance

[@sam-pz5zf]

I feel like buying/selling closer ATM options would be better right? You’d have a lower break even price and could get out of the trade quicker.

[@tayreaction4457]

I needed this information. I learned so much. Thank you. Now I must find a video that discusses if both legs are in the money prior to expiration, can it still be exercised.

[@shreepi327]

Thank you!! Awesome explanation. I have one question...can we only get max profit in bull call spread only at expiration, not before right ?even if the stock price is substantially higher than the short call you still can't make max profit by closing the spread before expiration right?...please answer iam.lil confused here..thanks!!

[@JK-vb9ps]

Typically u get max profit at expiration but if before expiration, share price hits your short strike price, you should consider to close your position prematurely as the profit difference at this point vs max profit at expiration may not be very significant. Analyse the trade with your time curve to confirm this. With time balance you are risking it since share price can come down.

[@shreepi327]

@@JK-vb9ps thanks!!😊

[@dasnova101]

In the example you have explained, If the system generate my maximum profit to be $200, does that take into account the money I use to place the trade too? Say I used $400 to place a trade and the system generates my maximum profit to show $200, does that add up to $400(My trade money) + $200(Maximum profit) or I’m at a lost of $200?

[@projectfinance]

If you see a profit of $200, that means your position increased by $200 from your initial purchase price of $400 (the position is now worth $600).

[@MagnetWatch-]

An awesome video!

[@jontattum1476]

Thank you for the video. In my opinion, the most important part of it is at 30:36 , because if an investor is unaware of this fact, it could spell financial ruin for them. Thanks again. Great channel.

[@nickpries]

GREAT VIDEO. !!!!!!!!!!!!!!!!!!!!!!!!!

[@projectfinance]

Thanks!

[@susan88888888able]

THANK YOU!!!! YOU ARE THE COOLEST

[@YOUTHOUGHTBOI1]

I wish i could like this video 10 more times

[@421mantis]

I got one more for ua

[@luckyone8159]

Do you need a lot of capital to open a bull call spread? Lets say the stock is at 155 u buy the 155 call and sell the 160put for contract expiring next week. Lets say next week the stock is at 170 and u get an early assignment for the 160 put, what happens next? Ur forced to sell 100 shares at 160 for 16000, but now u have to buy the 100 shares at 150 at 15000 and u keep rest of the profit right. But what if you dont have enough capital to buy 100 shares at 150, what happens next. Sorry im little confused.

[@monjurkarim9661]

Excellent video presentation to explain a davit call spread. Finding a little difficult to understand this part : "At/Below $145, the 145 and 155 calls will expire worthless." I understand that long call 145 is worthless at or below the strike $145 but how the short call 155 is also worthless ? As we know the when selling calls (short), so long the stock price is below the short call strike , we collect the max premium. I don't quite get it. kindly explain a little more if you can. Thanks

[@e.sanoop110]

Hi. Nice vdo. What are the risks involved in doing a Bull call spread with In the money or Deep in the money options😎😎😎

[@tieungu14]

What if you’re buying out of the money, and the strike price remain OTM. Do you just lose your premium? Are you only expected to exercise your option if it is ITM? And also, when you close, do you always close both at the same time? Thanks.

[@DermaGlowOasis]

Thank you :) If this is your first time watching this you might have to watch the video a couple times!

[@louisthompson1020]

all your videos are good!

[@abeautifulworldnow]

Do they always have to be in the money vs out of the money. What if they are both “in the money” just at a lower/higher strike price?

[@michaelabate5176]

Loved the video huge help, the explanation was excellent you put a lot of time into these videos. Quick question. If you are putting in a spread where you buy and sell both contract ITM, is assignment risk something you’re concerned about? And if so do you plan on exiting these trades a couple of weeks before exp. to help prevent assignment risk?

[@Eastbaypisces]

wanted to ask the same thing too

[@anandlobo1685]

Hello, I am new to option debit spreads. As an example if I trade a 49/70 Bull call spread & my entry cost is $995( probable profit $1105) & the stock price is $57.47 , my question is does the profit go up $ for $ as the price moves up

[@Eastbaypisces]

So do u sell the option right after u buy it, won't u still need the $in ur account?

[@MG-iw2ky]

What is it called if you buy a bull call spread but with the long call at a further out expiry date than the short call? And how does that strategy work? Thx.

[@DermaGlowOasis]

How do you know how far the strike price should be to purchase and sell an option.

[@davidchristieshow]

Right.. YOu get to buy the stock at the strike which is a lower price. Doesn't the exchange just settle the trade in cash if you're not assigned?

[@dewanehill1232]

Thank you for an excellent video. That is crystal clear and explains all the details of the strategy. I have a related question involving the mechanics. When entering the transaction, the net funds have to be available in your account for purchase. Is there any additional cash or margin that has to be available to place the trades?

[@alfsilva]

Great Video but On the call spread examples basically, there is 1:1 risk-reward ratio. I understand that on these types of trades at least a 1.5:1 or better still a 2:1 reward ratio is preferable. Is this correct?

[@brandonjones5093]

Great video! When my spread is at expiration ,and the stock is above the break even point do I have to do anything else to get my profits?

[@projectfinance]

Thanks! You can take profits at any time before expiration. You don't have to wait til expiration. If you buy a call spread and the stock price increases, you can sell the call spread at its now higher price and realize your profit. It's just like buying stocks in that you can enter and exit whenever you want. You can buy a call and sell it 30 seconds later if you want. The expiration doesn't lock you in.

[@Rahul-qb4bs]

Is the profit mentioned in the video made by exercising the call? Or is it something we automatically get when the call expires. I am confused as to how to cash those profits in. Because when I see selling calls they always have a bid and ask price so how is the exact price determined. To excercise the call do I have to buy the shares ,sell the shares? Do I need to have enough money in my account for that to actually make profit from the spread.

[@njperuviankid]

thanks bro i appreciate it. im learning alot

[@jazeppi79]

Awesome. Great video. Do you have any videos on how it would work with a diagonal bull call spread?

[@immapatcha8117]

You're soooo smart!! I'm a fan!! Thank you 😊

[@luckyone8159]

Do you need a lot of capital to open a bull call spread? Lets say the stock is at 155 u buy the 155 call and sell the 160put for contract expiring next week. Lets say next week the stock is at 170 and u get an early assignment for the 160 put, what happens next? Ur forced to sell 100 shares at 160 for 16000, but now u have to buy the 100 shares at 150 at 15000 and u keep rest of the profit right. But what if you dont have enough capital to buy 100 shares at 150, what happens next. Sorry im little confused.

[@1csegal]

Thank you!! Do you by any chance have a cheat sheet on options to share with us please?

[@3ilz]

wow, amazing explanation

[@elClubdelas7Cifras]

hi at 16:36, the 39 spread price.. was the price set by the market. If expired at the short call price, spread price would have been 60 USD, right? thanks

[@trd7538]

Hi can I ask do we need to own the 100 share first? Or we can use this for naked trade?

[@drhafizm287]

Thanks for the video, great teaching

[@ahnafhassan1612]

Hey thanks for Video. One question though. What happens when the short call option is ITM and the person who bought it decides to exercise it? If I am assigned to sell then shouldn't I just have the loss. Loss = price paid for the contract?

[@STEPXMoney]

Do I have to close a bull call spread to get a profit or do I still get a profit if I do nothing and let it expire?

[@whatThaWho]

When did Billy Corgan get into option trading?

[@Wisit661]

Thank you very much

[@louisthompson1020]

Great educator

[@hiteshagrawal7715]

Good insightful video. Well explained