13 lines
847 B
Plaintext
13 lines
847 B
Plaintext
Chapter 7: Bull Spreads
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SUMMARY
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185
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The bull spread is one of the simplest and most popular forms of spreading. It will
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generally perform best in a moderately bullish environment. A bull spread will not
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widen out to its maximum profit potential right away, though; so for short-term
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trades, the outright purchase of a call is a better choice. The bull spread can also be
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applied for more sophisticated purposes in a far wider range of situations than mere
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ly wanting to attempt to capitalize on a moderate advance by the underlying stock.
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Both call buyers and stock buyers may be able to use bull spreads to "roll down" and
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produce lower break-even points for their positions. The covered writer may also be
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able to use bull spreads as a substitute for covered writes in certain situations in
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which a deeply in-the-money call exists. |