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Call spread

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Call spread
A strategy that reduces the cost of buying a call Option by selling another call at a higher Strike Price (Bull call spread). This limits potential gain if the Underlying goes up, but the Premium received from selling the Out-of-the-money call partly finances the At-the-money call. A call spread may be advantageous if the purchaser thinks there is only limited upside in the Underlying. Alternatively a Bear call spread can be constructed by selling a call Option and buying another at a higher Strike Price.

See also Bear spread, Bull spread, Put spread
Posted by  Privatebanking.com
 
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