Bull Call Spread Screener Results For April 16th

With stocks in bullish mode it’s a good time to run Barchart’s Bull Call Spread Screener.

A bull call spread is an options strategy that a trader uses when they believe the price of an underlying stock will move higher in the short term.

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To execute the strategy, a trader would buy a call option and sell a further out-of-the-money call option with the following conditions:

Both call options must use the same underlying stock Both call options must have the same expiration Both call options must have the same number of options

Since the strike price of the sold call is higher than the strike price of the bought call, the initial position will be a net debit.

The bull call spread profits as the price of the underlying stock increases, similar to a regular long call.

The difference between a bull call spread and a regular long call is that the upside potential is capped by the short call.

The purpose of the short call is to mitigate some of the overall costs of the strategy at the expense of putting a ceiling on the profits.

Losses are also capped, in this case by the debit taken when you execute the trade.

Let’s take a look at Barchart’s Bull Call Spread Screener for April 16th:

As you can see, the scanner shows some interesting Bull Call Spread trades on stocks such as NVDA MSFT, AAPL, TSLA and NFLX.

Nvidia Bull Call Spread Example

Let’s take a look at the first line item – a bull call spread on Nvidia (NVDA). 

This bull call spread trade involves buying the June 18th expiry $180 strike call and selling the $183 strike call.

Buying this spread costs around $0.70 or $70 per contract. That is also the maximum possible loss on the trade. The maximum potential gain can be calculated by taking the spread width, less the premium paid and multiplying by 100. That give us:

3 – 0.70 x 100 = $230.

If we take the maximum gain divided by the maximum loss, we see the trade has a return potential of 30.43%.

The probability of profit is 69.4%, although this is just an estimate and does not indicate the probability of achieving the maximum profit.

The spread will achieve the maximum profit if NVDA closes above $183 on June 18th. The maximum loss will occur if NVDA closes below $180 on June 18th, which would see the trader lose the $230 premium on the trade. 

The breakeven point for the Bull Call Spread is $182.30 which is calculated as $183 plus the $0.70 option premium per contract.

The Barchart Technical Opinion rating is a 24% Buy with a Average short term outlook on maintaining the current direction.

Long term indicators fully support a continuation of the trend.

Nvidia is showing an IV Percentile of 15% and an IV Rank of 11.43%. The current level of implied volatility is 34.76% compared to a 52-week high of 58.26% and a low of 31.73%.

Apple Bull Call Spread Example

Let’s look at another example, this time using Apple (AAPL).

This bull call spread also uses the June expiry and involves buying the $240 strike call and selling the $255 strike call.

This trade would cost $310 and have a maximum potential profit of $1,190.

The Barchart Technical Opinion rating is an 8% Buy with a Weakest short term outlook on maintaining the current direction.

Apple is showing an IV Percentile of 63% and an IV Rank of 22.12%. The current level of implied volatility is 27.92% compared to a 52-week high of 65.20% and a low of 17.33%.

The Barchart Technical Opinion rating is a 32% Buy with a Weakening short term outlook on maintaining the current direction.

Long term indicators fully support a continuation of the trend.

Mitigating Risk

Thankfully, bull call spreads are risk defined trades, so they have some build in risk management. 

The most the NVDA example can lose is $70 while the AAPL call spread has risk of $310.

For each trade consider setting a stop loss of 50% of the max loss.

Also keep an eye on key support levels and moving averages.

Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.

On the date of publication, Gavin McMaster had a position in: NVDA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.