The bear call spread is a bearish strategy used by traders who want to capitalize on a decrease in the price of the underlying stock. The bear vertical consists of buying a higher strike call and selling a lower strike call. The call options will have the same expiration. The bear call spreads have limited risk and limited profit potential. The total premium received to put on the spread, the credit, is the max profit potential of the spread. The max loss is the difference between the two strike prices minus the original credit received.
Showing posts with label bearish. Show all posts
Showing posts with label bearish. Show all posts
Monday, June 20, 2011
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