# Bull-call debit vertical

**OPT-02b · Core Options · Core**

**Lesson question:** How does bull-call debit vertical express a moderately bullish view?

Original fictional examples; educational writing, not live market data, orders or production approval.

## By the end

- Read and reconstruct the priced ticket.
- Reconcile leg P/L with the combined graph.
- Explain the time, volatility and operational failure cases.

**Prerequisites:** OPT-F01, OPT-F02, OPT-F03, OPT-F04

A bull-call vertical buys a defined slice of upside. The lower-strike call gives you a right; the higher-strike call helps finance it by selling away additional gains. This is a deliberate trade-off, not a cheaper version of unlimited upside.

## 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.

## Priced fictional ticket

Read every leg before interpreting the combined payoff.

| Action | Quantity | Type | Strike | Expiry | Premium per unit | Multiplier |

|---|---:|---|---:|---|---:|---:|

| BUY | 1 | call | 100 | 2026-11-20 | 4.2 | 100 |

| SELL | 1 | call | 105 | 2026-11-20 | 2.2 | 100 |

Opening option cash: -200 USD (positive received, negative paid). Entry option fees: 1.3 USD.

$0.65 per option contract on entry only. No exit, assignment, financing or tax costs modeled.

Independent fictional premiums, not one simultaneous arbitrage-consistent chain. All legs realized simultaneously at intrinsic at the same expiry; terminal calculations do not model American early exercise, temporary unhedged positions, forced liquidation or live liquidity. Displayed chart domain is not a tail-risk cap.

**Before fees:** maximum terminal profit 300; maximum terminal loss magnitude 200; breakeven price(s) 102.

**After entry fees:** maximum terminal profit 298.7; maximum terminal loss magnitude 201.3; breakeven price(s) 102.013.

## 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.

## Calculation popup: Calculate this exact ticket

```text
P/L = Σ[q × multiplier × (intrinsic − opening premium)] + shares × (S−share entry) − costs
```

Intrinsic is nonnegative before the signed quantity is applied. This is a fictional terminal calculation.

1. +1 × 100 × (3.00 − 4.20) = $-120.00: 100 call.

2. -1 × 100 × (0.00 − 2.20) = $220.00: 105 call.

3. Opening fees: 1.30.

**Result:** Before costs $100.00; after entry fees only $98.70.

## Calculation popup: Maximum risk and breakevens

```text
Evaluate S=0, all strikes and the final tail slope; solve P/L=0 on each linear segment.
```

Same-expiry payoffs are piecewise linear. A finite chart range cannot prove a tail is bounded.

1. Maximum terminal profit is $300.00; maximum terminal loss magnitude is $200.00, before costs.

2. Breakeven points: 102.

3. Costs shift net P/L downward without moving the strikes.

**Result:** Maximum terminal profit is $300.00; maximum terminal loss magnitude is $200.00, before costs.

## Graph: The whole ticket at common expiry

**Horizontal:** Underlying settlement price (USD)  
**Vertical:** P/L per complete ticket (USD)

Solid combined curve is before fees; the second includes only the stated entry fees. Individual-leg lines explain construction. This is terminal intrinsic P/L, not current option value. Price can move outside the displayed range.

Complete numerical data are embedded in `scripts/options-strategies/OPT-02b.js` and displayed as an accessible table in the HTML lesson.

## The failure case

Settlement at 101 gives only 100 intrinsic against 200 paid. Removing the long leg first during an exit can also expose an uncovered short call. Defined terminal risk is not a guarantee of frictionless execution.

## Check your understanding

### What is whole-position terminal P/L at QLT 103.00, before costs?

**Answer:** $100.00

**Why:** Use all signed legs, not just the winning leg. The popup and graph use the same ticket.

### Does a terminal loss bound guarantee every early-assignment or liquidation outcome?

**Answer:** No.

**Why:** It describes the specified common-settlement payoff. Product rules, stock delivery, capital and execution still matter. **Critical risk check.**

## Takeaway

Explain the intended moderately bullish exposure, each leg's obligation and the adverse price region before using the strategy name.

## References and provenance

The cited references support definitions and conventions. The teaching prose, tickets and numerical scenarios are original; they are not attributed as historical market observations.

- [OIC Strategy Reference](https://www.optionseducation.org/strategies/all-strategies-en)

- [OCC Options Disclosure Document](https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document)

- [OIC Bull Call Spread](https://www.optionseducation.org/strategies/all-strategies/bull-call-spread-debit-call-spread)