bull spread investment & finance definition
The
simultaneous purchase of a call option with a lower exercise price and the sale
of a call option with a higher exercise price. A bull spread also can be
accomplished with the simultaneous sale of a put option with a higher exercise
price and the purchase of a put option with a lower exercise price. The trader
using this strategy expects the price of the underlying security to rise and
wants to limit the cost of purchasing options.
See bull spread in Wall Street Words
In futures and options trading, a strategy in which one contract is bought and a different contract is sold in such a manner that the person undertaking the spread makes a profit if the price of the underlying asset rises. Two contracts are used in order to limit the size of the potential loss. Compare
bear spread.
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