Call Spread

A call spread (csp) is the simultaneous purchase and sale of a call (long call and short call), with different strike prices but the same expiry date. The notional can be:

The same for both options.

In ratio, where the notional of the long call is in ratio to the notional of the short call. This is called a ratio call spread. For example, a buyer of a 1 by 2 ratio call spread would buy 1 amount of the lower strike and sell twice the amount of the higher strike.

Why buy a call spread?

Buying a call spread lets you express a moderate view on a moderate move in the underlying asset, by creating a trade with limited profit and limited risk.

You would buy a:

Bear call spread (buy a call with a higher strike and sell a call with a lower price) if you expected the underlying to fall. A fall in the underlying increases the value of the spread.

Bull call spread (buy a call with a lower strike and sell a call with a higher strike) if you expected the underlying to rise. A rise in the underlying increases the value of the spread.

Pricing a call spread in SDX Commodities & Energy

You can only automatically enter into a call spread in the Single Option page. To price a call spread in the Portfolio page, you need to build it manually out of its individual components.