Bull Call Spread: The Psychology

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The psychology or reasoning behind placing a bull call spread is determined by the expected share price move and analysis of “The Greeks” and how they affect the option prices.

The expected share price movement is bullish. However because you are selling an out-of-the-money call to receive a premium you cap the upside profit potential. The reasons for doing this are;

  • A premium is received and it lowers your entry cost.
  • Share price outlook may be a bullish share price increase towards a resistance level or a limited rise in share price.
  • Just buying a straight call options may be too expensive due to high volatility so selling an option against it may make the option trade affordable.


To receive ASX Option Recommendations or to learn more about Bull Call Spread, Bull Put Spread, Bear Call Spread, Bear Put Spread Strategies please request the Option Spreads eBook by contacting us on 07 5504 2244 or info@totaloptions.com.au

Option Greeks

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Option Greeks

The “Greeks” in options trading is known as a way to measure the sensitivity of an option price to changes in its parameters. The Greeks can help option traders to better understand the potential risk and reward of an option position. However, it is important to note that the numbers given for each of the Greeks are strictly theoretical, as they are only projections based on mathematical models.

  • Delta: is a measure of the change in the option price resulting from a change in the underlying stock price.
  • Gamma: is a measure the rate of change of delta due to a one-point change in the price of the underlying stock.
  • Theta: is a measure of the rate of decline of an option’s time value resulting from the passage of time known as time decay.
  • Vega: is a measure of the sensitivity of an option’s price to changes in Implied Volatility (IV).
  • Rho: is a measure of the change in an option’s price due to a change in interest rate. If interest rates increase this will mean that the call options value increases and the put options value decreases.


To receive ASX Option Recommendations or to learn more about trading options please request the complete Introduction to Options Trading eBook by contacting us on 07 5504 2244 or info@totaloptions.com.au