Chapter 25: LEAPS 
FIGURE 25-7. 
Bull spread comparison at April expiration. 
Stock Price 
405 
The diagonal spread is different, however. Typically, the maximum profit poten­
tial of a bull spread is the difference in the strikes less the initial debit paid. For this 
diagonal spread, that would be $1,000 minus $2,050, a loss! Obviously, this simple 
formula is not applicable to diagonal spreads, because the purchased option still has 
time value premium when the written option expires. The profit graph shows that 
indeed the diagonal spread is the most bullish of the three. It makes its best profit at 
the strike of the written option - a standard procedure for any spread - and that prof­
it is greater than either of the other two spreads at April expiration ( under the sig-
TABLE 25-4. 
Bull spread comparison at April expiration. 
Stock Price Short-Term Diagonal LEAPS 
80 -500 -1, 100 -200 
90 -500 - 600 -150 
100 -500 50 - 25 
110 500 750 50 
120 500 550 150 
140 500 150 250 
160 500 50 350 
180 500 - 350 450