Брокер Bull Option

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Bull Option Review

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All information on Bull Option.

He is a operated and owned by an anymous company. The company behind this broker wants to remain anonymous.. The address of this company is: 205 Woodmansterne Road, London, SW16 5TY.

They can be contacted by phone at : +44 7418 330685 or by mail at : [email protected] .

Their website is www.bull-option.com

Licenses and regulations.

The FCA has issued a public warning against this broker because it offers trading in Europe without having regulated licenses. It’s prohibited by law but apparently it doesn’t stop this broker. When a broker receives a public warning, there is a good chance that it’s a scam.

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Bull Spread

What Is a Bull Spread?

A bull spread is an optimistic options strategy designed to profit from a moderate rise in the price of a security or asset. A variety of vertical spread, it involves the simultaneous purchase and sale of either call options or put options with different strike prices but with the same underlying asset and expiration date. Whether a put or a call, the option with the lower strike price is bought and the one with the higher strike price is sold.

A bull call spread is also called a debit call spread because the trade generates a net debt to the account when it is opened. The option purchased costs more than the option sold.

The Basics of a Bull Spread

If the strategy uses call options, it is called a bull call spread. If it uses put options, it is called a bull put spread. The practical difference between the two lies in the timing of the cash flows. For the bull call spread, you pay upfront and seek profit later when it expires. For the bull put spread, you collect money up front and seek to hold on to as much of it as possible when it expires.

Both strategies involve collecting a premium on the sale of the options, so the initial cash investment is less than it would be by purchasing options alone.

Key Takeaways

  • A bull spread is an optimistic options strategy used when the investor expects a moderate rise in the price of the underlying asset.
  • Bull spreads come in two types: bull call spreads, which use call options, and bull put spreads, which use put options.
  • Bull spreads involve simultaneously buying and selling options with the same expiration date on the same asset, but at different strike prices.
  • Bull spreads achieve maximum profit if the underlying asset closes at or above the higher strike price.

How the Bull Call Spread Works

Since a bull call spread involves writing a call option for a higher strike price than that of the current market in long calls, the trade typically requires an initial cash outlay. The investor simultaneously sells a call option, aka a short call, with the same expiration date; in so doing, he gets a premium, which offsets the cost of the first, long call he wrote to some extent.

The maximum profit in this strategy is the difference between the strike prices of the long and short options less the net cost of the options—in other words, the debt. The maximum loss is only limited to the net premium (debit) paid for the options.

A bull call spread’s profit increases as the underlying security’s price increases up to the strike price of the short call option. Thereafter, the profit remains stagnant if the underlying security’s price increases beyond the short call’s strike price. Conversely, the position would have losses as the underlying security’s price falls, but the losses remain stagnant if the underlying security’s price falls below the long call option’s strike price.

How the Bull Put Spread Works

A bull put spread is also called a credit put spread because the trade generates a net credit to the account when it is opened. The option purchased costs less than the option sold.

Since a bull put spread involves writing a put option that has a higher strike price than that of the long call options, the trade typically generates a credit at the start. The investor pays a premium for buying the put option but also gets paid a premium for selling a put option at a higher strike price than that of the one he purchased.

The maximum profit using this strategy is equal to the difference between the amount received from the sold put and the amount paid for the purchased put – the credit between the two, in effect. The maximum loss a trader can incur when using this strategy is equal to the difference between the strike prices minus the net credit received.

Benefits and Disadvantages of Bull Spreads

Bull spreads are not suited for every market condition. They work best in markets where the underlying asset is rising moderately and not making large price jumps.

As mentioned above, the bull call limits its maximum loss to the net premium (debit) paid for the options. The bull call also caps profits up to the strike price of the option.

The bull put, on the other hand, limits profits to the difference between what the trader paid for the two puts—one sold and one bought. Losses are capped at the difference between strike prices less the total credit received at the creation of the put spread.

By simultaneously selling and buying options of the same asset and expiration but with different strike prices the trader can reduce the cost of writing the option.

Bull Call Spread

What Is a Bull Call Spread?

A bull call spread is an options trading strategy designed to benefit from a stock’s limited increase in price. The strategy uses two call options to create a range consisting of a lower strike price and an upper strike price. The bullish call spread helps to limit losses of owning stock, but it also caps the gains. Commodities, bonds, stocks, currencies, and other assets form the underlying holdings for call options.

How To Manage A Bull Call Spread

The Basics of a Call Option

Call options can be used by investors to benefit from upward moves in a stock’s price. If exercised before the expiration date, these trading options allow the investor to buy shares at a stated price—the strike price. The option does not require the holder to purchase the shares if they choose not to. Traders who believe a particular stock is favorable for an upward price movement will use call options.

The bullish investor would pay an upfront fee—the premium—for the call option. Premiums base their price on the spread between the stock’s current market price and the strike price. If the option’s strike price is near the stock’s current market price, the premium will likely be expensive. The strike price is the price at which the option gets converted to the stock at expiry.

Should the underlying asset fall to less than the strike price, the holder will not buy the stock but will lose the value of the premium at expiration. If the share price moves above the strike price the holder may decide to purchase shares at that price but are under no obligation to do so. Again, in this scenario, the holder would be out the price of the premium.

An expensive premium might make a call option not worth buying since the stock’s price would have to move significantly higher to offset the premium paid. Called the break-even point (BEP), this is the price equal to the strike price plus the premium fee.

The broker will charge a fee for placing an options trade and this expense factors into the overall cost of the trade. Also, options contracts are priced by lots of 100 shares. So, buying one contract equates to 100 shares of the underlying asset.

Key Takeaways

  • A bull call spread is an options strategy used when a trader is betting that a stock will have a limited increase in its price.
  • The strategy uses two call options to create a range consisting of a lower strike price and an upper strike price.
  • The bullish call spread can limit the losses of owning stock, but it also caps the gains.

Building a Bull Call Spread

The bull call spread reduces the cost of the call option, but it comes with a trade-off. The gains in the stock’s price are also capped, creating a limited range where the investor can make a profit. Traders will use the bull call spread if they believe an asset will moderately rise in value. Most often, during times of high volatility, they will use this strategy.

The bull call spread consists of steps involving two call options.

  1. Choose the asset you believe will appreciate over a set period of days, weeks, or months.
  2. Buy a call option for a strike price above the current market with a specific expiration date and pay the premium. Another name for this option is a long call.
  3. Simultaneously, sell a call option at a higher strike price that has the same expiration date as the first call option. Another name for this option is a short call.

By selling a call option, the investor receives a premium, which partially offsets the price they paid for the first call. In practice, investor debt is the net difference between the two call options, which is the cost of the strategy.

Realizing Profits From Bull Call Spreads

The losses and gains from the bull call spread are limited due to the lower and upper strike prices. If at expiry, the stock price declines below the lower strike price—the first, purchased call option—the investor does not exercise the option. The option strategy expires worthlessly, and the investor loses the net premium paid at the onset. If they exercise the option, they would have to pay more—the selected strike price—for an asset that is currently trading for less.

If at expiry, the stock price has risen and is trading above the upper strike price—the second, sold call option—the investor exercises their first option with the lower strike price. Now, they may purchase the shares for less than the current market value.

However, the second, sold call option is still active. The options marketplace will automatically exercise or assign this call option. The investor will sell the shares bought with the first, lower strike option for the higher, second strike price. As a result, the gains earned from buying with the first call option are capped at the strike price of the sold option. The profit is the difference between the lower strike price and upper strike price minus, of course, the net cost or premium paid at the onset.

With a bull call spread, the losses are limited reducing the risk involved since the investor can only lose the net cost to create the spread. However, the downside to the strategy is that the gains are limited as well.

Investors can realize limited gains from an upward move in a stock’s price

A bull call spread is cheaper than buying an individual call option by itself

The bullish call spread limits the maximum loss of owning a stock to the net cost of the strategy

The investor forfeits any gains in the stock’s price above the strike of the sold call option

Gains are limited given the net cost of the premiums for the two call options

A Real World Example of a Bull Call Spread

An options trader buys 1 Citigroup Inc. (C) June 21 call at the $50 strike price and pays $2 per contract when Citigroup is trading at $49 per share.

At the same time, the trader sells 1 Citi June 21 call at the $60 strike price and receives $1 per contract. Because the trader paid $2 and received $1, the trader’s net cost to create the spread is $1.00 per contract or $100. ($2 long call premium minus $1 short call profit = $1 multiplied by 100 contract size = $100 net cost plus, your broker’s commission fee)

If the stock falls below $50, both options expire worthlessly, and the trader loses the premium paid of $100 or the net cost of $1 per contract.

Should the stock increase to $61, the value of the $50 call would rise to $10, and the value of the $60 call would remain at $1. However, any further gains in the $50 call are forfeited, and the trader’s profit on the two call options would be $9 ($10 gain — $1 net cost). The total profit would be $900 (or $9 x 100 shares).

To put it another way, if the stock fell to $30, the maximum loss would be only $1.00, but if the stock soared to $100, the maximum gain would be $9 for the strategy.

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