Bull-call debit vertical

Construction: read every leg

Buy the 100 call for 4.20 and sell the 105 call for 2.20. Net debit is 2.00 or 200. At expiry the spread is worth zero below 100, rises between 100 and 105, and is capped at its five-point width above 105. Maximum profit is 500−200=300; maximum loss is 200. With 1.30 opening fees those become 298.70 and 201.30, and breakeven becomes 102.013.

Read the ticket before the graph

BUY means you own an option right; SELL means you accept a short-option obligation. Positive quantities are long and negative quantities are short in the calculation. Check quantity, call/put, strike, multiplier and expiry before netting premium.

All legs in this example share November 20, 2026 expiration. The entry observation is October 6, 2026, with fictional QLT at 100. These are independent illustrative premiums, not a current option chain or executable quotes. The terminal diagram assumes every leg and any shares are resolved at one common settlement price.

Before expiry: time and volatility

The position is generally bullish, but opposing options partly offset time and volatility effects. Net Gamma, Theta and Vega vary with location. A rally to 105 before expiry does not automatically deliver full terminal profit because the short call still has time value.

Manage the position deliberately

Suppose the spread can be sold later for 3.20. That realizes 120 before costs. Waiting for 5.00 risks a current 320 position value to seek 180 more. That forward-looking comparison is more useful than focusing on the old debit. Monitor short-call assignment; the long call is not automatically exercised to repair an assigned short.

From opening cash to a settlement result

Read the opening instructions: buy 1 100 call at 4.20; sell 1 105 call at 2.20. Option opening cash is $200.00 paid as a debit. A received credit is not earned profit while the obligation remains open.

Set the common settlement price to 103.00. Calls have intrinsic value max(S−K,0); puts have max(K−S,0). Subtract the opening premium from each intrinsic value, then multiply by signed quantity and the 100-unit multiplier. Shares contribute their price change from their own cost. The calculation popup shows every leg.

The combined result is $100.00 before costs and $98.70 after illustrative opening fees of $1.30. Exit fees, slippage, funding, dividends and taxes are not included. Opening fees are 0.65 per option contract, not a statement of any broker's pricing.

Maximum terminal profit is $300.00; maximum terminal loss magnitude is $200.00, before costs. Isolated zero-P/L settlement points in the model: 102. Move the scenario slider across each strike and explain why the slope changes there. A strike is a contract threshold, not a prediction.

This terminal model is useful for comparing risk shapes, but actual American-style assignment, share delivery, forced liquidation or a failed multi-leg exit can produce a different path. A long protective leg is not an automatic instruction that a broker must exercise it when another leg is assigned.

Open the calculation without leaving this lesson

Check your understanding

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