📈 Options Made Simple: What Is a Bull Call Spread?
Featuring our recent ENTG idea
Hello everyone,
We’ve had a few questions from newer subscribers about some of the options strategies we’ve been using in QM Trades.
If you're not super familiar with options yet — no worries. Let’s break down one of the most approachable strategies: the bull call spread.
🧠 What Is a Bull Call Spread?
A bull call spread is a defined-risk, directional strategy you can use when you believe a stock is likely to move moderately higher — not skyrocket, just push up within a known range.
Here's how it works:
Buy a call option at a lower strike (this gives you the right to buy the stock).
Sell a call option at a higher strike (this caps your profit but helps reduce the cost).
Both options expire on the same date, and the difference between the two strike prices is your spread width.
💰 What Are the Risks and Rewards?
Let’s make this crystal clear:
Max Profit = Difference between strikes − Cost of trade
Max Loss = The upfront cost (your net debit)
Break-even = Lower strike + Cost of trade
If the stock finishes above the upper strike, you earn the maximum profit. If it finishes below the lower strike, the entire trade expires worthless — and your loss is limited to what you paid.
🔍 Real Example: The ENTG Trade from QM Trades
Here’s how we applied this strategy in a recent trade idea shared in QM Trades.
Stock: Entegris Inc. (ENTG)
Reference Price: $72.72 (The price the stock was trading at when we posted the idea)
Bullish Thesis: We expected a push to at least $76.20, with a potential move as high as $82.10 based on price structure and flow data.
So, we deployed a bull call spread:
Buy the $72.50 Call
Sell the $80.00 Call
Expiration: July 18th
Cost of trade: Approx. $3.20
What does that mean?
Max Profit = $80.00 − $72.50 − $3.20 = $4.30 per spread
Max Loss = $3.20 per spread
Break-even = $72.50 + $3.20 = $75.70
As long as ENTG trades above $75.70 by expiration, the trade moves into profit. If it closes above $80, we capture the full $4.30 reward on a $3.20 risk — a potential return of ~134%.
⚠️ Risks to Keep in Mind
Even though this strategy is more conservative than buying a naked call, it’s not risk-free:
If ENTG closes below $72.50 at expiration, the spread expires worthless — and we lose the $3.20 paid.
The profit is capped at $80 — no matter how high ENTG goes.
Time decay can erode the value of the spread if the stock doesn’t move quickly enough.
That said, it’s still one of the most risk-defined and capital-efficient ways to express a bullish thesis.
✅ Why Use a Bull Call Spread?
It’s ideal when:
You expect moderate upside, not explosive gains.
You want to define both your risk and reward.
You’re looking for a cheaper alternative to buying a long call outright.
Final Thoughts
The bull call spread is one of the foundational tools in our QM Trades toolkit — and for good reason. It offers a smart balance of risk control, cost-efficiency, and profit potential for directional trades like ENTG.
We’ll continue to highlight and explain strategies like this, especially when real-world examples come up in our trade flow. If you’re looking to learn by doing, or want to sharpen your execution, stick with us — and as always, feel free to reply with questions or requests.