Bull and Bear Call Spreads: Defined-Risk Directional Crypto Options
Summary
The document explains vertical call spreads, which combine long and short calls on the same underlying asset with the same expiry and different strikes. A bull call spread buys the lower-strike call and sells the higher-strike call, generally for a debit; a bear call spread sells the lower-strike call and buys the higher-strike call, generally for a credit. It outlines how maximum profit, maximum loss, and expiry breakeven depend on strike width and the net premium: the bull spread’s breakeven adds its debit to the lower strike, while the bear spread’s subtracts its credit from the upper strike.
An ETH example uses Fibonacci levels and MACD to motivate a bullish position, then gives strikes, expiry, premiums, and a payoff illustration. The example is specific to its stated market setup and is not evidence of a repeatable edge. The strategy caps both upside and loss, but multi-leg execution can leave a trader exposed if only one option fills. The document also flags expiry, implied volatility, liquidity, and strike selection as considerations, though it does not develop a pricing or risk-management model.
Key ideas
- A bull call spread buys a lower-strike call and sells a higher-strike call with the same expiry.
- A bear call spread sells a lower-strike call and buys a higher-strike call with the same expiry.
- The net debit or credit and strike width determine the spread’s capped profit, loss, and breakeven.
- Spreads limit exposure compared with an outright position, while also limiting potential gains.
- Partial fills can leave an unhedged option position, so execution risk matters.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.