When traders feel bullish, buying a call can seem like the obvious move. But a call is only one way to express a bullish view. A bull put credit spread is another—and the two trades can behave very differently.
Here’s a simple hypothetical example to show why the choice matters.
Two ways to express a bullish view
Assume a stock is trading at $100. You think it may rise, or at least avoid a large drop.
Buy a call: You pay $2 per share, or $200 for one standard contract. Your breakeven at expiration is $102. Your maximum loss is the $200 premium.
Open a bull put spread: You sell the $95 put and buy the $90 put, collecting $1 per share, or $100 for one spread. Your breakeven at expiration is $94. Your maximum loss is $400, before fees.
The spread’s maximum loss is the $5 width between the strikes, minus the $1 credit, multiplied by 100 shares. That is a real risk—even though the trade starts with a credit.
What if the stock barely moves?
If the stock finishes at $100 at expiration, the call expires worthless. The call buyer loses the $200 premium.
The bull put spread expires out of the money, so the seller keeps the $100 credit, before fees.
If the stock finishes at $101, the call is still below its $102 breakeven and loses money at expiration. The spread still keeps its full credit.
What if the stock makes a big move?
If the stock rises to $110, the call is worth $8 per share at expiration. After subtracting the $2 paid, the call earns $600 per contract. The spread still earns its maximum profit of $100.
That’s the central trade-off: the call has much more upside if the stock rises sharply. The spread gives up that upside in exchange for a wider range of prices where it can still make its limited maximum profit.
And if the stock falls?
If the stock falls below $94 at expiration, the spread begins losing money. At $90 or lower, it reaches its maximum loss of $400. The call buyer’s loss is capped at the $200 premium paid.
These example positions use one contract each, but they do not have the same risk or capital requirements. They are meant to show how the payoff shapes differ—not to say one trade is automatically safer or better.
Which one fits the view?
A call may fit a view that expects a meaningful move higher before expiration, and where the buyer accepts the premium as the maximum loss.
A bull put spread may fit a view that expects the stock to rise, stay near its current price, or remain above a chosen level. In return, the trader accepts a capped profit and a defined potential loss.
Neither trade is a shortcut around being wrong. A call can lose its entire premium. A spread can lose several times the credit collected. Price movement, time, and changes in volatility all affect option values before expiration.
The useful question isn’t simply, “Am I bullish?” It’s: How much do I expect the stock to move, how soon, and what loss am I willing to accept if I’m wrong?
Keep building a stronger portfolio,
Paul — Mr Premium
Educational content only. This hypothetical example is not a recommendation to place a trade. Options involve risk; figures exclude fees and assume expiration payoff.