A Bull Call Spread combines:
Buy a lower strike call (e.g., ATM)
Sell a higher strike call (e.g., OTM)
Result: Lower net cost than buying a call alone, with capped upside.
Structure:
Buy: 10 ETH calls at $3,000 strike
Sell: 10 ETH calls at $3,300 strike (10% OTM)
Net Cost: Premium paid - Premium received
Why it works: Selling the higher strike call reduces upfront cost but limits profit above that strike.
Step 1: Buy Lower Strike Call
Provides upside exposure
Premium paid upfront
Step 2: Sell Higher Strike Call
Offsets some premium cost
Caps maximum profit
Requires collateral (covered call)
Net Effect:
Lower upfront cost than buying a call alone
Profit zone between the two strikes
Maximum profit = spread width - net cost
Maximum loss = net cost
Current ETH Price: $3,000
Buy 10 Calls @ $3,000: Pay $80/ETH = $800
Sell 10 Calls @ $3,300: Receive $40/ETH = $400
Net Cost: $800 - $400 = $400
Maximum Profit: ($3,300 - $3,000) × 10 - $400 = $2,600
Maximum Loss: $400 (if ETH stays below $3,000)
Expect a move up, but not extreme
Want to reduce cost vs. buying calls
Budget Constraints
Lower upfront cost
Better capital efficiency
Defined Profit Target
Comfortable capping upside
Prefer cost reduction over unlimited upside
Volatility Concerns
Lower cost reduces time decay impact
More forgiving if price moves slowly
Extremely Bullish: Use a straight call for unlimited upside
Neutral/Bearish: Not suitable
High Volatility Expected: May prefer a straight call
Setup:
Current ETH: $3,000
Buy: 10 ETH calls at $3,000 strike (ATM)
Sell: 10 ETH calls at $3,300 strike (10% OTM)
Duration: 7 days
Premium paid: $80 per ETH = $800
Premium received: $40 per ETH = $400
Net Cost: $400
Lower Strike Call ($3,000):
Expires worthless
Loss: $800
Higher Strike Call ($3,300):
Expires worthless (no exercise)
Premium kept: $400
Net Result:
Loss: $800 - $400 = -$400
ROI: -100%
Maximum loss = net cost
Lower Strike Call ($3,000):
At strike, no intrinsic value
Loss: $800
Higher Strike Call ($3,300):
Expires worthless
Premium kept: $400
Net Result:
Loss: $800 - $400 = -$400
ROI: -100%
Lower Strike Call ($3,000):
Profit: ($3,150 - $3,000) × 10 = $1,500
Premium paid: -$800
Net: +$700
Higher Strike Call ($3,300):
Expires worthless
Premium kept: $400
Net Result:
Profit: $700 + $400 = +$1,100
ROI: 275%
Lower Strike Call ($3,000):
Profit: ($3,300 - $3,000) × 10 = $3,000
Premium paid: -$800
Net: +$2,200
Higher Strike Call ($3,300):
At strike, no exercise
Premium kept: $400
Net Result:
Profit: $2,200 + $400 = +$2,600
ROI: 650%
Maximum profit achieved
Lower Strike Call ($3,000):
Profit: ($3,600 - $3,000) × 10 = $6,000
Premium paid: -$800
Net: +$5,200
Higher Strike Call ($3,300):
Exercised against you
Loss: ($3,600 - $3,300) × 10 = -$3,000
Premium received: +$400
Net: -$2,600
Net Result:
Profit: $5,200 - $2,600 = +$2,600
ROI: 650%
Profit capped at maximum
Option A: Buy 10 Calls at $3,000
Premium: $800
Profit: ($3,300 - $3,000) × 10 = $3,000
Net: $3,000 - $800 = +$2,200
ROI: 275%
Option B: Bull Call Spread
Net Cost: $400
Profit: +$2,600
ROI: 650%
Comparison:
2.4x higher ROI with Bull Call Spread
50% less capital required
Capped upside (vs. unlimited with straight call)
Option A: Buy 10 Calls at $3,000
Premium: $800
Profit: ($3,600 - $3,000) × 10 = $6,000
Net: $6,000 - $800 = +$5,200
ROI: 650%
Option B: Bull Call Spread
Net Cost: $400
Profit: +$2,600 (capped)
ROI: 650%
Comparison:
Straight call outperforms on larger moves
Bull Call Spread is more capital efficient on moderate moves
Maximum Loss = Net Premium Paid
In our example:
Net cost: $400
Maximum loss: $400 (if ETH stays at or below $3,000)
Defined risk: Loss is limited to net premium.
Maximum Profit = Spread Width - Net Cost
In our example:
Spread width: $3,300 - $3,000 = $300 per ETH
Total spread: $300 × 10 = $3,000
Net cost: $400
Maximum profit: $3,000 - $400 = $2,600
Capped upside: Profit cannot exceed this amount.
Break-Even = Lower Strike + Net Cost Per ETH
In our example:
Lower strike: $3,000
Net cost per ETH: $400 ÷ 10 = $40
Break-even: $3,000 + $40 = $3,040
ETH must rise above $3,040 to profit.
Both legs are long options (buying)
Time decay works against the position
Less impact than a straight call due to lower net cost
If the short call is exercised early, you may need to deliver ETH
Requires collateral management
On MegaFi, positions are managed automatically
Tighter Spread (e.g., $3,000 / $3,150):
Lower maximum profit
Lower net cost
Higher probability of profit
Wider Spread (e.g., $3,000 / $3,600):
Higher maximum profit
Higher net cost
Lower probability of maximum profit
Shorter Duration (7 days):
Lower premium
Faster time decay
Requires quicker price movement
Longer Duration (30 days):
Higher premium
More time for price to move
Higher time decay cost
If price moves favorably but hasn't reached maximum profit:
Close the current spread
Open a new spread with higher strikes
Lock in partial profit and maintain exposure
Premiums update continuously
No stale quotes
Better entry timing
Execute both legs instantly
No execution risk
Optimal spread pricing
Gas: <$0.005
More profit retained
Both positions as NFTs
Transferable
Use as collateral
Trade on secondary markets
No counterparty risk
Instant settlement
Always available liquidity
Lower Cost: Bull Call Spread costs less than buying calls alone
Defined Risk: Maximum loss = net premium paid
Capped Profit: Maximum profit = spread width - net cost
Capital Efficient: Better ROI on moderate moves
Moderately Bullish: Ideal for expected price increases, not extreme moves
Requires Selling: Needs selling capability (covered call on short leg)
Best For: Traders who are moderately bullish, want lower cost, and accept capped upside.
Not For: Traders expecting extreme moves who want unlimited upside.
Coming Soon: Bull Call Spread will be available as a one-click strategy on MegaFi.