How It Works: You sell at a Call at a lower strike price eg. USD 610 to collect a premium. At the same time you buy a Call at a higher strike price eg. USD 615 to cap your potential losses. Both transactions have the same expiration date.
The Profit: Your maximum profit is the net credit which is the difference in premiums you receive upfront. This is realised if QQQ closes below the strike price at expiration.
Your maximum loss is capped. This is calculated as the difference between strikes minus the net credit received.
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Do I need to fork out the money? Or itβs covered because I have paid the premiums?