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+178 Part II: Call Option Strategies 
+must be pointed out that the bull spread has fewer dollars at risk and, if the under­
+lying stock should drop rather than rise, the bull spread will often have a smaller loss 
+than the outright call purchase would. 
+The longer it takes for the underlying stock to advance, the more the advantage 
+swings to the spread. Suppose XYZ does not get to 35 until expiration. In this case, 
+the October 30 call would be worth 5 points and the October 35 call would be worth­
+less. The outright purchase of the October 30 call would make a 2-point profit less 
+one commission, but the spread would now have a 3-point profit, less two commis­
+sions. Even with the increased commissions, the spreader will make more of a prof­
+it, both dollarwise and percentagewise. 
+Many traders are disappointed with the low profits available from a bull spread 
+when the stock rises almost immediately after the position is established. One way to 
+partially off set the problem with the spread not widening out right away is to use a 
+greater distance between the two strikes. When the distance is great, the spread has 
+room to widen out, even though it won't reach its maximum profit potential right 
+away. Still, since the strikes are "far apart," there is more room for the spread to 
+widen even if the underlying stock rises immediately. 
+The conclusion that can be drawn from these examples is that, in general, the 
+outright purchase is a better strategy if one is looking for a quick rise by the under­
+lying stock. Overall, the bull spread is a less aggressive strategy than the outright pur­
+chase of a call. The spread will not produce as much of a profit on a short-term move, 
+or on a sustained, large upward move. It will, however, outperform the outright pur­
+chase of a call if the stock advances slowly and moderately by expiration. Also, the 
+spread always involves fewer actual dollars of risk, because it requires a smaller debit 
+to establish initially. Table 7-2 summarizes which strategy has the upper hand for var­
+ious stock movements over differing time periods. 
+TABLE 7-2. 
+Bull spread and outright purchase compared. 
+If the underlying stock ... 
+Remains 
+Relatively Advonces Advances 
+Declines Unchanged Moderately Substantially 
+in ... 
+1 week Bull spread Bull spread Outright purchase Outright purchase 
+1 month Bull spread Bull spread Outright purchase Outright purchase 
+At expiration Bull spread Bull spread Bull spread Outright purchase