Call Backspread

Description

Selling few ATM Calls and buying more OTM Calls.

Trading Logic

Bullish volatility strategy betting on a massive rally.

Practical Example

Stock at $100. Sell 1 $100C, buy 2 $110C. Net debit: $2.

P/L Curve

Chart Description
  • X-Axis: Stock price at expiration
  • Y-Axis: Expected P/L ($)
  • Green area: Profit; Red area: Loss