Spread options refer to buying and selling options on the same expiration date. Bull market spread options are usually used in conservative and bullish situations to reduce costs

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There are two strategies for bull spread options:

• Debit spread: Buy a low-priced call option and sell high-priced call options on the same expiration date. When the stock price exceeds the exercise price of the high-priced option, the maximum profit can be achieved; the maximum profit is the difference between the two options exercise price multiplied by 100 Subtract the premium paid for purchasing this strategy.
• Credit spread: buying a low-priced put option and selling high-priced put options on the same expiration date. When the stock price closes at the exercise price of the high-priced option, the maximum return can be reached; the maximum return is the income from trading the spread option (Credit). 

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Examples of advanced usage scenarios:

• The buyer holds a call option with an exercise price of $20 for X stock that expires in January. When the stock price is $22, the buyer buys this option with $300 ($3 per stock value). But now the stock price drops to $18, this option only worths $150 ($1.5 per stock value). As a remedy of losses, the buyer then sells two call options for X stocks that expire in January with an exercise price of $20, and at the same time purchases an option for X stock that expires in January with an exercise price of $15. At this time, the buyer’s holding position is a long call option of $15 in January and a short call option of $20 in January. This combination is called a bull market spread option.
• The original strategy (one naked call  option with an exercise price of $20) will require the stock price reaching $23 to maintain a breakeven at maturity date. Under the bull spread strategy, the stock price only needs to reach 18 yuan on the maturity date to be able to balance the cost.