ETF Bull Call Spread Options Strategy Explained
May 27, 2013 at 09:00 AM EDT
Exchange-traded funds (“ETFs”) have become a popular way for investors to reach every corner of the market, enabling them to achieve broad diversification by purchasing a single U.S.-traded security. Those looking to enhance their ETF trading may want to take a look at equity/stock option strategies to help control risks and/or leverage profits [see ETF Call And Put Options Explained]. In this article, we’ll take a look at how ETF investors can use the bull call spread strategy to profit from modest upside, while limiting maximum potential losses. What Is a Bull Call Spread Strategy? Suppose that you believe that the S&P 500 SPDR will rally modestly over the coming month, but there’s an interest rate decision that could have a big negative impact. Purchasing the underlying stock would be risky, since the interest rate decision could lead to sharp losses, while purchasing outright call options may be an expensive [...] Click here to read the original article on ETFdb.com. Related Posts: Homebuilder ETFs In Focus After New Home Sales Data Daily ETF Roundup: DXJ Tumbles After Nikkei Freefall, XLU Slumps Daily ETF Roundup: TLT Tumbles On Fed Tapering Fears, XLB Slumps Daily ETF Roundup: Healthcare Shares Boost IHI And XLV Daily ETF Roundup: DBP Pops On Fed Speculations, XLE Rallies