Long Call Spread & Short Put


Buy a Call Option Spread & Sell a Put Option

Margin Requirement

Yes, pay the difference in premiums and post variable margin on the put similar to futures in a falling market


  • Establishes a Range of Protection from higher prices
  • Some benefit to lower prices
  • Cost is reduced by selling both call & put
  • Flexible, offset at any time
  • Least expensive option strategy alternative


  • Limited benefit from lower futures price (to put’s strike price)
  • Protection limited to the higher call strike less the net cost
  • Offsetting before expiration will change the cost & P/L (disadvantage in both a higher and lower market)

When to Apply

  • If market outlook is neutral or perceived risk to higher and lower prices is balanced
  • If minimum cost in strategy selection is a priority
  • If unlimited protection from higher prices is unnecessary AND potential long futures position below the market is acceptable
  • In a high volatility environment historically and/or seasonally

Potential Adjustment

  • In a rising market, buy back short put option to capture decay in premium, roll up short call option to extend range of protection, and/or roll up long call to capture gain from increase in price
  • In a falling market, buy back short call option, roll down short put option to extend opportunity to participate in lower prices, and/or roll down long call option to capture savings from drop in price