1. What it is
Buy one lower-strike call, sell one middle-strike call and sell one higher-strike call at a common expiration.
2. Why use it
Target a moderate rise while selling an additional call to fund entry.
3. How the numbers work
View example
- Buy 1 × Call · Strike 100
- Sell 1 × Call · Strike 105
- Sell 1 × Call · Strike 110
All option legs have the same expiration.
- Option premium paid
- 1
- Expiration breakeven
- 101 / 114
- Maximum expiration profit
- 4
- Maximum expiration loss
- Theoretically unlimited
- Underlying at expiration 100 → Loss 1
- Underlying at expiration 110 → Profit 4
4. How it changes
Delta can start bullish and turn bearish after a large rise. The two short calls often create negative gamma around the upper strikes.
5. What to watch for
One call remains uncovered in the upside tail. At or below the lowest strike the loss equals the debit, but that is not the maximum loss.
Bull in the name does not mean every rise helps. The extra short call makes a rally beyond the target dangerous.
Examples use illustrative entry prices and amounts per underlying unit, before costs. Contract amounts require the contract multiplier. Expiration payoffs assume the illustrated legs remain intact; earlier position values and exercise or assignment outcomes can differ.