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bull spread

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Financial Dictionary

Bull Spread

An option strategy in which maximum profit is attained if the underlying security rises in price. Either calls or puts can be used. The lower strike price is purchased and the higher strike price is sold. The options have the same expiration date.

Investopedia Commentary

You make a lot of money if the stock rises. You lose it all if it doesn't. It's one of those higher risk maneuvers that can cause a lot of anxiety.

Related Links

Options Basics Tutorial

See also: Bear Spread, Butterfly Spread, Option

Also spelled: bullspread

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Financial Dictionary

bull spread

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.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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