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  • 1) Bullish Call-Spread (CS)
  • 2) Bearish Put-Spread (PS)
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Options Strategy

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Last updated 22 days ago

1) Bullish Call-Spread (CS)

A call-spread strategy involves buying a call option at a lower strike price and selling a call option at a higher strike price, with the same expiration, reflecting a bullish view on the underlying market

Option Payout: Max (S-K1, 0) - Max (S-K2, 0), where S is the underlying asset spot price at maturity, and K are Option Strikes. Best-Case Scenario: If S is greater than or equal to K2, the payout is K2-K1 Worst-Case Scenario: If S is equals to or less than K1, payout is 0 More details:

2) Bearish Put-Spread (PS)

A put-spread strategy involves buying a put option at a higher strike price and selling a put option at a lower strike price, with the same expiration, reflecting a bearish view on the underlying market

Option Payout: Max (K2-S, 0) - Max (K1-S, 0), where S is the underlying asset spot price at maturity, and K are Option Strikes. Best-Case Scenario: If S is less than or equal to K1, the payout is K2 - K1. Worst-Case Scenario: If S is greater than or equal to K2, the payout is 0. More details:

https://www.investopedia.com/terms/b/bullcallspread.asp
https://www.investopedia.com/terms/b/bearputspread.asp