What is the bull option strategy?

A bull call spread is a sophisticated options trading strategy employed by traders who anticipate a moderate rise in the price of an underlying asset. This strategy aims to capitalize on the asset's potential appreciation within a predefined price range.

To execute a bull call spread, traders typically purchase a call option with a lower strike price and simultaneously sell a call option with a higher strike price, both expiring on the same date. The difference in strike prices represents the trader's expected price range for the asset.

The advantage of a bull call spread lies in its limited risk and potential for profit. Since the trader has sold a call option, they receive a premium that offsets the cost of purchasing the lower strike call. This limits the trader's potential loss to the difference between the premiums received and paid, regardless of how far the asset's price falls below the lower strike.

On the other hand, if the asset's price rises within the expected range, the trader can profit from the increase in the value of the lower strike call option while limiting their upside potential by selling the higher strike call. This structure allows traders to profit from a modest increase in asset price without having to commit to a full-fledged long position.

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