11.40Bull Call Spread
1What is it?
Buy a lower-strike call and sell a higher-strike call (same expiry).
2Why does it exist?
When it is used: You expect a moderate rise and want a cheaper trade than a plain long call.
3Diagram
Max profit
₹11,700
Max loss
₹7,800
Breakeven
₹25,120
4Calculation
- Buy 25,000 CE at 200, sell 25,300 CE at 80 → net cost 120.
- Expiry ≥ 25,300 → +₹11,700.
- Expiry ≤ 25,000 → −₹7,800.
- Maximum profit: (Width − net debit) × lot = (300 − 120) × 65 = ₹11,700
- Maximum loss: Net debit: 120 × 65 = ₹7,800
- Breakeven: Lower strike + net debit = 25,120
5Risks
- Limited-risk position: the most you can lose is known in advance.
- Premiums shown are hypothetical; real premiums depend on volatility and time to expiry.
6Quick revision
- Max profit: (Width − net debit) × lot = (300 − 120) × 65 = ₹11,700
- Max loss: Net debit: 120 × 65 = ₹7,800
- Breakeven: Lower strike + net debit = 25,120
7Knowledge check
Q1. Net debit if you buy at 150 and sell at 60?Show answer
90.
Q2. Why sell the higher call?Show answer
To reduce cost (but cap profit).
Q3. Limited or unlimited risk?Show answer
Limited.
See it live on MojoStox