A bull call spread costs less than a straight call by selling a higher-strike call against it. You cap your upside, but you cut your cost and risk.
A bull call spread uses two call options on the same stock with the same expiration date. You buy a lower-strike call and sell a higher-strike call. The premium you receive from selling the upper call offsets part of the cost of buying the lower call.
The result is a position that profits when the stock rises, with both risk and reward clearly defined.
Maximum profit: (Upper strike − lower strike − net debit) × 100. In the example: ($110 − $100 − $3) × 100 = $700.
Maximum loss: The net debit paid. In the example, $300.
Breakeven at expiration: Lower strike + net debit. In the example: $100 + $3 = $103.
A bull call spread works best when you're moderately bullish and when implied volatility is high. Selling the upper call captures some inflated premium, partially insulating you from an IV crush. The spread gives you a lower breakeven point than a naked call in exchange for capping your upside.