Front Spread w/ Calls

Name: Front Spread w/ Calls

Setup: Buy (long) Strike A call and Sell (short) 2 Strike B calls

Bias: Neutral to Slightly Bullish

 

Break-Even: Strike B + Max Profit

 

Max Profit: Limited: Strike B – Strike A + Credit Received

Max Loss: Unlimited if the underlying climbs

Margin: Margin equals the requirement for the short call

Time Decay: Time decay is a positive effect.  As time goes on it will lower the value of your long call but also lower the value of your short calls which outweigh the long

Implied Volatility: After the play is put on you want volatility to decrease as it will have a greater positive effect on the short calls

Notes: None at this time

Featured in Trade Review: None at this time