You buy a $50/$55 bull call spread for $2 net debit. The stock expires at $57. What is your profit?

Max profit = spread width ($5) minus net debit ($2) = $3 per share ($300 per contract). The stock exceeded the higher strike ($55), so you capture the full spread width.

What is a bull call spread?

Buy a lower-strike call, sell a higher-strike call. Net debit position. Profits if stock rises moderately. Max gain = strike difference minus premium paid. Max loss = premium paid.

What is the advantage of a spread over a naked long option?

Lower premium cost, defined maximum loss, and reduced theta decay impact. Trade-off: maximum profit is capped at the spread width minus premium paid.

What is a credit spread?

Selling an option and buying a further out-of-the-money option for protection. You collect net premium upfront. Max profit = premium received. Max loss = spread width minus premium received.

TradeSmart

IntermediateOptions Strategy

Options Spreads: Limit Cost, Limit Risk

A spread involves buying and selling options simultaneously. It reduces your premium cost and caps your maximum loss — at the trade-off of also capping your maximum gain.

By Jim Liu · Published February 2026

TL;DR

A spread involves buying and selling options simultaneously. It reduces your premium cost and caps your maximum loss — at the trade-off of also capping your maximum gain.

Bull Call Spread

Buy a call at a lower strike, sell a call at a higher strike. You pay less premium than buying a call alone (the sold call offsets cost). Max profit = difference in strikes minus net premium paid. You profit if the stock rises to or beyond the higher strike.

Key Terms:

bull call spreaddebit spreadnet premium

→Call vs Put Options →Covered Call Strategy

Options Spreads: Limit Cost, Limit Risk

Bull Call Spread

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