Comparison of Two Bull Spreads: Bull Call or Bull Put?

Bull Put Spread and Bull Call Spread are two popular options trading strategies used by investors who are optimistic about the future price movements of an underlying asset.
While both strategies aim to profit from a bullish market outlook, they differ in their approach and risk-reward profiles. Understanding the similarities and differences between these two strategies can help traders choose the one that best fits their investment goals and risk tolerance.

In this article, we will compare these two strategies in terms of their construction, practical scenarios, as well as profit and loss potentials.

Let's go through their definitions first.

Next, let's take a closer look at the similarities and differences between these two strategies.

Summary

Investors may choose between a Bull Call Spread and a Bull Put Spread based on their expectations of price movements, implied volatility, and risk appetite.

If investors are optimistic about the market with a low risk tolerance, and the current implied volatility is low, they may choose a Bull Call Spread to potentially profit from a rise in the stock price.

If investors are not pessimistic about the market with higher risk tolerance, and the current implied volatility is high, they may choose a Bull Put Spread to both collect premium upfront when the market remains stable or rises slightly, and limit their potential losses in case of a significant drop in stock prices.

Risk Statement

The examples provided herein are for illustrative and educational purposes only and not intended to be reflective of results any investor can expect to achieve. The figures shown in the examples are not guarantees or projections, and no taxes or fees/expenses are included in the calculations which would reduce the figures shown. Actual results will vary.
Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services on Moomoo are offered by Moomoo Financial Inc., Member FINRA/SIPC.
This article is for educational use only and is not a recommendation of any particular investment strategy. Content is general in nature, strictly for educational purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. All investing involves risks. Any examples are provided herein are for illustrative purposes only and not intended to be reflective of results any investor can expect to achieve.
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options (https://j.us.moomoo.com/00xBBz) before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.
Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy.