Bull Spreads

A bull spread option strategy is used by the option trader who is looking to profit from an expected rise in the price of the underlying security.

Vertical Bull Spreads

The vertical bull spread is a vertical spread in which options with a lower striking price are purchased and options with a higher striking price sold. Depending on whether puts or calls are used, the vertical bull spread can be established with a credit or a debit.

Bull Put Credit Spread

A vertical bull spread can be established for a credit if put options are used. The strategy is also known as the bull put spread.

Bull Call Debit Spread

A vertical bull spread can be established for a debit if call options are used. The strategy is also known as the bull call spread.

Horizontal & Diagonal Bull Spreads

The bull calendar spread and the diagonal bull spread are both time spread strategies used by option traders who believe that the price of the underlying security will remain stable in the near term but will eventually rise in the long term.

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Writing Puts to Purchase Stocks

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Dividend Capture using Covered Calls

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Learn about the put call ratio, the way it is derived and how it can be used as a contrarian indicator.... [Read on...]

Understanding Put-Call Parity

Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 1969. It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa.... [Read on...]

Understanding the Greeks

In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions. They are known as "the greeks".... [Read on...]

Valuing Common Stock using Discounted Cash Flow Analysis

Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash flow.... [Read on...]

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