Bull Call Spreads vs. Bull Put Spreads

Discussion in 'Options' started by cactiman, May 17, 2012.

  1. Any preferences here on Buying Bull Call Spreads vs. Selling Bull Put Spreads for an Uptrending Stock?
    I've preferred Selling Bull Put Spreads because you can just let it expire wothless, versus Selling the Bull Call Spread to close and paying another commission.
    But maybe they've got it figured so one gets more $$ for the Bull Call Spread to make up for that?
    One trader said he Buys Bull Call Spreads for where he wants the underlying to go, and Sells Bull Put Spreads for where he doesn't want it to go. But is that just aesthetics?
    Anyone done the math on this?
    Are they different, or is either approach exactly the same in the end?

  2. Buying Bull Call Spreads has a better Risk/Reward Ratio over Selling Bull Put Spreads.

  3. Bull Call spreads for stocks I want to go up and Bear Put Spreads on stocks I want to go down - it's easier keeping things straight in my head. I tend to have too many positions - haha

    If I do a credit spread I will choose another symbol (assuming an ETF) - I don't do credit spreads on stocks.

    Am interested to hear other thoughts on this ~

  4. Interesting. Wonder why that is. (?)

  5. I see. Cool.
    When you Sell To Close a $100 Bull Call Spread, and both Strikes are totally In The Money, can you get $100, or do you have to unload it for $97?
    If so, that $3 + $3 commission = -6% profit lost.
    Is this a problem, versus the Bull Put Spread expiring worthless at no cost?
    Or do you normally roll it over for less than $100 long before the Expiration Date?
  6. I wouldn't put on a trade just to make 100$ so I'm less concerned about commissions ... better to be patient and work a trade to get an extra penny or nickel then to worry about commissions IMO.

    The ease of doing it my way and avoiding mistakes is worth the extra expense (to me).

    I don't pretend to be a huge volume or the most sophisticated options trader - I have alot of open positions (50+), and I'm not a spring chicken anymore. I usually go for the longest dated option available unless the spreads are too wide, so I'm not turning things over constantly. And I close all ITM spreads out hopefully long before expiration and hopefully with a nice profit :)

    I prefer these type of defined risk trades over calendar spreads cause I don't have to deal with slippage and commissions every month, and I've been alot more successful with simpler spreads (read that as I FAILED alot in calendar spreads.)
  7. sorry for a green question.

    I get confused by these four terms, bull call spread,bull put spread,bear call spread and bear put spread. Which are the credit spreads and which are debit spreads. Is there some easy simple way to remember this. Thanks.
  8. Why not do both so you're neutral volatility? Takes a bit of guesswork out of symmetry (correlation to VIX).
  9. call is positive, put is negative.
    bull is positive, bear is negative.

    think of it as two signs of + and -, or just substitute bull with long and bear with short.

    when you sell a call (short a call, bear call) for example you are taking money and waiting for the value to diminish or expire worthless, so you just took credit... er... i'm not sure if i'm good at explaining this actually. :/

    i guess you can look at credit/debit as whenever you sell vs buy options, as simple as that. when you sell an option you get $ up-front.

    bear call is selling a call
    bear put is buying a put
    bull call is buying a call
    bull put is selling a put

  10. Thanks for your time and details. I just used the $100 example to make the math simple. The online commissions are nothing now of course.

    What hair I have left is white, so I remember paying a few hundred dollars in commissions and making phone calls to the Broker to Buy 100 shares! Sounds like you might recall those days as well.

    I too prefer longer term trades, mostly 6-9 months out.
    Guess I'm still just a Trend Trader, using Options as Surrogates for the Stocks.
    Also really prefer having the built in Risk Control with Spreads. Just set the cost at a maximum of 2% of equity and let it go.
    Not getting whipsawed all the time like with Stocks - trying to figure out a safe place to put the Stops, etc.
    #10     May 18, 2012