Bull Call Spread<\/a><\/span>. In review, I want the stock to close above $93 per share at the close on next Friday, the stock is at $93.10 at the entry of the position. Let’s go over what happens to these 2 Calls if the stock closes above $93. We’ll look at one at a time. With the Long Call I have the right to buy the stock at $90, I’m making at least $3 on that position. I also own the short Call that has me obligated to deliver 200 shares of MU at $93. So, I have the right to buy 200 shares at $90 and I’m obligated to sell 200 shares at $93. These 2 positions cancel each other out and my account is up $300. I DO NOT need the money in my account to buy and sell the stock positions! Remember, the position cost me $1.30 so my profit is $1.70. A quick way to figure out the maximum profit is the difference between the 2 Strike Prices ($3) minus the Net Cost of the position ($1.30). My total profit on the 2 contracts ($1.70 X 200) is $340.<\/p>\nLet’s take a look at the return. The entire Bull Call Spread cost me ($1.30 X 200) which is ($260) for the 2 contracts. I profited a total of $340 with the 2 contracts. To calculate the Rate of Return you divide the profit by the investment, times 100 ($340 \u00f7 $260 X 100 = 130.7%). OR, $1.70 \u00f7 $1.30 X 100 = 130.7%.<\/p>\n
The Bull Call Spread is a low cost way to bring in a huge Rate on Investment (ROI).<\/p>\n
I will continue to work on this strategy and report my results. The bottom line is you must pick a stock that you feel will be above the Short Call’s Strike Price on Expiration Day.<\/p>\n
Any questions send me an email.<\/p>\n
<\/p>\n
Successful trading,<\/p>\n
Steve<\/p>\n
The Options Coach<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"I continue to work on the strategy of Bull Call Spreads. I have 3 that will expire today and I just entered 1 with Micron (MU) that will expire next Friday. With Micron in the area of $93.10 per share I bought 2 MU 3\/22\/24 $90 Calls for a premium of $6.40. Along with this […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-14126","page","type-page","status-publish","hentry"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/P75MP0-3FQ","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/14126","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14126"}],"version-history":[{"count":1,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/14126\/revisions"}],"predecessor-version":[{"id":14127,"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=\/wp\/v2\/pages\/14126\/revisions\/14127"}],"wp:attachment":[{"href":"https:\/\/www.mainstbeatswallst.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}