Bull spread: Difference between revisions
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''Options speculation''. | |||
A composite speculative deal in two options, which results in a profit/loss profile similar to a conventional call option, except that the upside potential is capped in return for a reduction in the net premium payable. | A composite speculative deal in two options, which results in a profit/loss profile similar to a conventional call option, except that the upside potential is capped in return for a reduction in the net premium payable. | ||
A bull spread can be constructed using call options by buying a call with a given strike price, and selling an otherwise identical call with a higher strike price. It can also be constructed using appropriate put options. | A bull spread can be constructed using call options by buying a call with a given strike price, and selling an otherwise identical call with a higher strike price. It can also be constructed using appropriate put options. | ||
Sometimes known as a 'risk reversal'. | |||
== See also == | == See also == | ||
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* [[Bull]] | * [[Bull]] | ||
* [[Call option]] | * [[Call option]] | ||
* [[Speculation]] | |||
[[Category:Financial_products_and_markets]] | |||
Latest revision as of 16:36, 27 June 2022
Options speculation.
A composite speculative deal in two options, which results in a profit/loss profile similar to a conventional call option, except that the upside potential is capped in return for a reduction in the net premium payable.
A bull spread can be constructed using call options by buying a call with a given strike price, and selling an otherwise identical call with a higher strike price. It can also be constructed using appropriate put options.
Sometimes known as a 'risk reversal'.
