Credit Call Spread
The credit call spread is a type of vertical spread options strategy used when an investor expects a moderate decrease or neutral movement in the price of the underlying asset. It involves:
- Selling a call option at a lower strike price.
- Buying a call option at a higher strike price.
- Both options having the same expiration date.
- Net premium received upfront, creating a limited-profit, limited-risk scenario.
This strategy profits from a decrease in the underlying asset's price up to the strike price of the short call option, beyond which losses are limited.