39.3 Lessons learnt

  • A bull call spread consists of a bought call option and a sold call option with a higher strike price.
  • The buyer of a call spread anticipates the underlying value will increase. There is, however, a maximum profit. 
  • By accepting a maximum, he will receive a premium for the sold call option, so his investment is lower.
  • With a bear call spread, the sold call option has a lower strike price than the purchased call option. This way, the investor gets a premium!
  • A (naked) sold call option means an unlimited risk because an investor does not hold the underlying value.
  • Adding a bought call option with a higher strike price results in a capped maximum risk. The total premium will be lower.