Bull Call Spread

You sell the higher strike call to reduce the cost of your bullish bet. The premium you receive from selling subsidises your purchase of the lower strike call. Yes, this caps your upside profit, but it significantly reduces your cost and breakeven. For moderate bullish moves, this is an excellent trade-off.

Your profit is capped at the spread width minus your cost. If FTSE rises to 8,500 but your short strike is 8,000, you still only make the max profit (£150 in our example). The short call's obligation is covered by your long call's greater value. You don't lose money - you just don't participate in further gains.

Yes, options can be exercised early. If your short call is deep ITM, you may be assigned (forced to sell at the short strike). However, your long call protects you - you can exercise it to buy at the lower strike. Your risk is always limited to the original debit paid.

Yes, significantly. When you buy futures, your potential loss can be substantial if the market falls. With a Bull Call Spread, your maximum loss is the premium paid - it's defined before you enter. This makes it a much safer way to express a bullish view.

For most UK retail traders, spread betting has a major advantage: profits are tax-free. However, exchange-traded options may have better pricing and execution. Consider your tax situation and trade size. For smaller accounts, tax-free spread betting is often preferable.

Use Bull Call Spread (debit) when: IV is low (buying cheap options), you want to be right about direction, you're okay paying upfront. Use Bull Put Spread (credit) when: IV is high (selling expensive options), you want time decay on your side, you're comfortable with margin requirements.

If down 30-40% and thesis still valid: hold if within your time window. If down 50%: close and take the loss per your rules. Rolling down (to lower strikes) rarely makes sense - it's usually better to take the loss and find a new opportunity. Don't fight a strong downtrend.

UK markets are closed Saturday-Sunday but global events continue. If you're near your stop loss on Friday, consider closing. If you're in profit and near target, definitely close. Weekend gap risk from US/Asia markets can affect your position at Monday's open.

On the ex-dividend date, the stock price drops by approximately the dividend amount. This hurts call options. If trading single stock options through ex-dividend, either avoid it, adjust your strikes to account for the drop, or use index options (FTSE 100) which are less affected.

FTSE 100 options are more liquid, cash-settled, and have weekly expiries available. Single stock options (BP, Shell, etc.) are less liquid, physically settled, and usually only have monthly expiries. FTSE 100 is generally easier to trade with tighter spreads.

Pre-BoE: Position sizing smaller due to binary risk. If confident in dovish outcome, can enter before with wider stops. Post-BoE: Enter after announcement if bullish thesis confirmed - removes binary risk. For major BoE decisions, consider waiting for market reaction before entering.

Consider conversion when: market entering strong rally mode, VFTSE dropping (bullish signal), technical breakout confirmed with volume. Buy back the short call to unlock unlimited upside profit potential. Be aware this significantly increases your cost basis and exposure to IV changes.

The 30-day rule means if you sell and repurchase the same asset within 30 days, you can't use the loss for CGT purposes. For options, different strikes or expirations are typically considered different assets, giving more flexibility. Consult a tax advisor for specific situations.

In the positive gamma zone (FTSE below short strike): sell FTSE futures or spread bets on rises to lock in delta gains, buy back on dips. This extracts value from oscillations. As FTSE approaches short strike, gamma flips negative - delta hedging becomes costly and you should consider closing.

FTSE 100 is heavily influenced by overnight US market moves. S&P 500 futures trading after UK close (4:30 PM - 9 PM GMT) affect next day's FTSE open. Consider: closing positions before US close if uncertain, using stop losses that account for gap risk, monitoring US futures for overnight moves.