📈 My Options Strategy on CBOE: A Bull Call Spread Play

📈 My Options Strategy on CBOE: A Bull Call Spread Play

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🎯 1. My Current Market View

I am currently positioning myself for a moderately bullish outlook rather than an aggressive rally. The market has been volatile, and while I do see potential upside, I don’t expect a sharp breakout immediately. Because of this, I prefer a strategy that allows me to benefit from upside while still controlling my risk. That’s why I chose to enter a structured options trade instead of simply buying stock.

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🧠 2. The Strategy I Chose: Bull Call Spread

The strategy I am using is called a bull call spread. Specifically, I bought one call option with a strike price of $285 and sold one call option with a strike price of $295, both expiring on April 10, 2026. This means I am betting that the stock price will rise, but not necessarily explode far beyond $295.

This strategy allows me to define both my maximum profit and maximum loss upfront, which is something I value in uncertain markets.

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💰 3. My Entry Pricing Based on the Option Chain

Looking at the option chain:

• The $285 call is trading around $4.45 (mid price)

• The $295 call is trading around $0.95 (mid price)

So, I paid:

• Buy call: $4.45

• Sell call: $0.95

👉 My net cost (debit) = $4.45 - $0.95 = $3.50 per share

Since 1 contract = 100 shares, my total cost = $350

This $350 is the maximum I can lose in this trade.

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📊 4. Understanding My Payoff Structure

This trade has a very clear structure:

• If the stock stays below $285, both options expire worthless

• If the stock rises between $285 and $295, I start making profit

• If the stock goes above $295, my profit is capped

This is a controlled bullish strategy — I am not chasing unlimited upside, but I am optimizing risk vs reward.

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🚀 5. My Maximum Profit Scenario (Above $295)

If the stock price goes above $295 at expiration, both options will be in the money.

Here’s what happens:

• My $285 call gains full intrinsic value

• My $295 call (which I sold) offsets some of that gain

The spread between strikes is:

👉 $295 - $285 = $10

So the maximum value of the spread = $10

Since I paid $3.50, my maximum profit is:

👉 $10 - $3.50 = $6.50 per share

👉 Total profit = $650 per contract

✅ So if the stock is $295 or higher, I earn $650 maximum

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⚠️ 6. My Maximum Loss Scenario (Below $285)

If the stock falls below $285 at expiration:

• Both options expire worthless

• I lose my entire premium

👉 My loss = $3.50 per share = $350 total

This is the worst-case scenario, and it is fully defined from the start.

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⚖️ 7. My Breakeven Point

My breakeven is:

👉 Strike price + premium paid

👉 $285 + $3.50 = $288.50

So:

• Above $288.50 → I start making profit

• Below $288.50 → I am still losing money

This helps me clearly understand where I need the stock to move.

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📉 8. What If Price Stays Between $285 and $295?

If the stock ends between these levels, I make partial profit.

For example:

• If stock = $290

• My $285 call = $5 value

• My $295 call = $0

Profit = $5 - $3.50 = $1.50 per share

👉 Total = $150 profit

So even without hitting $295, I can still make money.

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🛡️ 9. Why I Prefer This Strategy

I prefer this setup because:

• My risk is capped at $350

• My reward is clearly defined at $650

• My risk-reward ratio is almost 1:2

In a volatile market, I don’t want unlimited downside exposure. This structure allows me to stay in the game without overcommitting capital.

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🔄 10. My Thought Process Behind This Trade

I am not expecting an explosive breakout. Instead, I believe the stock can gradually move higher, possibly toward the $290–$295 range.

By selling the $295 call, I sacrifice unlimited upside, but in return:

• I reduce my cost

• I improve my risk-reward

• I increase my probability of profit

This is a more disciplined approach compared to buying naked calls.

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📊 11. Comparing to Buying a Single Call

If I had only bought the $285 call:

• My cost would be higher ($4.45)

• My breakeven would be higher

• My downside risk would be larger

By adding the short $295 call:

• I reduce my cost to $3.50

• I lower my breakeven

• I make the trade more efficient

This is why I prefer spreads over single-leg options.

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🧠 12. Final Thoughts: Controlled Risk, Defined Reward

Overall, this trade reflects my current mindset — cautious but opportunistic. I am positioning for upside, but I am not willing to take unlimited risk to chase it.

👉 Maximum profit: $650 (above $295)

👉 Maximum loss: $350 (below $285)

👉 Breakeven: $288.50

For me, this is a balanced trade. I know exactly what I can gain and what I can lose, and that clarity helps me stay disciplined regardless of market noise.

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L