Debit spreads
Bull call spread
Buy an at-the-money call, sell a further out-of-the-money call.
Index goes upOpens for a debitNew to optionsLoss capped
How it works
A cheaper way to be bullish than buying a call outright: the sold call pays for part of the bought one. In exchange you give up everything above the sold strike.
What it costs you when you are wrong
You can lose the entire amount paid, and you will if the index does not rise. Because both legs decay, being right about direction but wrong about timing still loses money.
The position
- 1Buy the call at the money
- 2Sell the call 4 strikes out of the money
- Enter
- 6 trading days before expiry
- Exit
- hold to expiry
- Legs
- 2
Test it yourself
This runs against real historical market data. Nothing is uploaded, nothing is stored, and the result is not a prediction — it is what this rule would have done, on that index, in that year, with the costs shown.