Sunday, August 7, 2011

Bull Call Spread (8 Aug 11)

Bull Call Spread (ETFs)

A Bull Call spread is a debit spread created by purchasing a Call with a lower strike price and selling a Call with a higher strike price.  Both options expire in the same month.  This is a bullish strategy and should be implemented when you expect the market to close above the strike price of the short Call option—the point of maximum reward (at expiration).  

GLD  $161.75
Buy to Open (1) Sep 11 158 C @ $6.60
Sell to Open (1) Sep 11 163 C @ $3.75 
Net Debit: $2.85 ($285.00)
Breakeven: $160.85
Max. Profit: $215.00
Pct Return: 75.4% (41 days)

TLT  $102.32
Buy to Open (1) Sep 11 98 C @ $5.35
Sell to Open (1) Sep 11 103 C @ $2.32 
Net Debit: $3.03 ($303.00)
Breakeven: $101.03
Max. Profit: $197.00
Pct Return: 65.0% (41 days)

VXX  $30.31
Buy to Open (1) Sep 11 25 C @ $7.35
Sell to Open (1) Sep 11 30 C @ $4.25 
Net Debit: $3.10 ($310.00)
Breakeven: $28.10
Max. Profit: $190.00
Pct Return: 61.3% (41 days)

All positions displayed are for educational purposes only and are not intended to be recommendations.

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