bull spread

bull spread definition - finance
The simultaneous purchase of a call option with a lower exercise price and the sale of a call option with a higher exercise price. A bull spread also can be accomplished with the simultaneous sale of a put option with a higher exercise price and the purchase of a put option with a lower exercise price. The trader using this strategy expects the price of the underlying security to rise and wants to limit the cost of purchasing options.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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