Double Bull Spread

Double Bull Spread starts from a simple idea: A bull call spread and a bull put spread together. One side pays a debit, the other takes a credit, and both want a higher price. The construction is long a lower call and short a higher call, plus short a higher put and long a lower put.

The sketch on this page uses a sample price of 50 and round teaching premiums, so you can see the shape. A live quote will use different strikes and a different debit or credit, and the picture before expiry is softer than the line at expiry because leftover time still has value.

Read Double Bull Spread as a finished bet on where price will be when the options expire, not as a forecast of every day in between. If price falls through the put strikes, the put spread loses. The call spread can expire worthless at the same time.

A bullish view built from two verticals so the result stays bounded. Traders usually file it under Bullish Outlook. That label is a starting filter, not a promise that the trade will work.

It is a poor fit when your forecast needs a payoff this structure cannot deliver. If you need unlimited upside, do not choose a capped spread. If you cannot carry an open-ended loss, do not choose a naked or ratio position that still has an uncovered short option. Match the forecast to the shape on the chart before you match it to the name.

You own 1 45 call and 1 45 put. You sold 1 55 call and 1 55 put. There is no share leg, so the result comes only from the options.

Every option in the sample shares one expiry, so the line is the profit or loss if you hold to that date and the options are settled for their intrinsic value.

The sample is opened around even. The profit or loss then comes from the later move, not from an opening payment.

The profit tops out at 10 pts in this sample. After price reaches the zone where every long option is as valuable as it can be against the shorts, a further move does not add profit.

That cap is the trade you accepted in exchange for a smaller debit or a credit. Double Bull Spread is the wrong tool if your forecast needs a much larger move than the distance between the strikes.

The worst expiry result in this sample is -10 pts. Both the long and short options have finished on the wrong side of that number, and the remaining loss is the net debit or the strike gap that the credit did not cover.

A capped loss is still a real loss. It is the amount you should be willing to spend or reserve before you open Double Bull Spread, not a figure to discover after the move.

In this sample the line crosses zero at 50. The gold dots sit on that zero line. The dashed line is only the sample spot of 50, not a target.

Each breakeven already includes the debit you paid or the credit you received. If you pay more than this sample, the profitable zone shrinks. If you receive a larger credit, the zone widens. Double Bull Spread should be judged from your fill, not from these round numbers.

Implied volatility does not point one way for every leg of Double Bull Spread. A long option gains from higher volatility and a short option loses, so the net mark depends on which strike is closer to the live price.

At expiry the argument ends. Volatility is gone and only the price relative to the strikes remains. Do not hold a volatility view into the final hour and expect it to survive settlement.

Long and short quantities in Double Bull Spread offset, so theta is not a single number. The option closer to the live price dominates the daily decay.

Check which strike is nearest after a large move. The leg that used to help can become the leg that hurts without any change in your view.

The short leg is 1 55 call and 1 55 put. Assignment can happen before expiry once that option is in the money, and it is more likely when it is deep in the money or when a dividend makes early exercise attractive.

If you are assigned, the long option does not automatically cancel the stock the same afternoon. You can wake up long or short shares for a day. Closing Double Bull Spread before expiry, instead of hoping both legs expire together, removes that weekend guess.

If price falls through the put strikes, the put spread loses. The call spread can expire worthless at the same time.

The sample breakeven sits at 50. Into the last day, decide whether you will close or hold. A short option that finishes near its strike can be assigned or not, and you may not know which until the next session. Double Bull Spread is easier to manage when that decision is made while the market is still open.