Bull Call Spreads, Bull Put Spreads

Question 1

What are the steps in a Bull Call Spread?

Answer 1

1. Buy lower strike calls.
2. Sell same number of higher strike calls with the same expiration date.
   (Enter this trade when you expect the underlying asset price to RISE. The advantage to this strategy is having more time to exit the trade if the asset price falls. It’s a longer-term strategy – at least six months to expiration.)

Question 2

What are the steps in a Bull Put Spread?

Answer 2

1. Buy a lower strike put.
2. Sell a higher strike put with the same expiration date. (Short-term income strategy, spanning one month to expiration).