A bull spread is an options trading strategy designed to profit from a moderate rise in the price of the underlying asset. It can be constructed using either calls (bull call spread) or puts (bull put spread). In a bull call spread, the trader buys a call at a lower strike price and sells a call at a higher strike price, both with the same expiration date. The strategy limits both maximum profit and maximum loss, making it a defined-risk approach suitable for traders with a moderately bullish outlook.
Example
“He entered a bull call spread on SPY by buying the $450 call and selling the $460 call for a net debit of $3.50, targeting a move above $460 by expiration.”