Bull Calls Are Bull Puts

Here is a brief lesson on why, synthetically, vertical debits are equal to vertical credits. What I mean is that a bull call is the same as a bull put and a bear put is the same as a bear call. This is a lesson I teach all my one-on-one students because it is an important one. Here we will focus on the bull call and bull put.

Bullish Bias

With bull in the name for both bull calls and bull puts, it goes without saying there is a bullish bias to the option trade. Generally, option traders use bull calls for a directional move and bull puts for an expected non-move lower. But what if you substituted puts for calls when modeling out a bull call spread? The risk/reward would essentially be the same (bid/ask spreads may skew this a tad), max profit, max loss and breakevens too.

Option Greeks

What surprises a few option traders is the option greeks are also the same. Many option traders will focus on the bull put (credit spread) because of the positive theta that is associated with selling an out-of-the-money (OTM) credit spread. But if calls were substituted for puts, the positive theta would essentially be the same. And so would the other option greeks.

Synthetic Example

In the example below, the underlying was trading essentially in between the long and short strikes.


Hence, the gamma, theta and vega are close to neutral for both and the delta is essentially positive 10 for both. Max risk for the bull call on the left is the cost of 1.25 (4.65 – 3.40), which means the max profit is also 1.25 (2.50 (diff in strikes) -1.25 (cost)). The breakeven for the trade is $298.75 (297.50 + 1.25 (cost)). The bull put on the left has the exact same max profit, max risk and breakeven. Max profit is 1.25 (4.90 – 3.65), which means the max risk is 1,25 and the breakeven is $298.75 (300 – 1.25 (credit)).

Crazy but True

There are reasons you might choose one over the other even though they are synthetically the same. Selling deeper in-the-money (ITM) options will be assigned from time to time and generally will have wider bid/ask spreads too. Why give the market maker an advantage, right? Prove it to yourself too. Model out a bull call spread and then change the calls to puts and you will see exactly what we just talked about. Just knowing about synthetics can make you a better and wiser option trader.

John Kmiecik

Senior Options Instructor

Market Taker Mentoring

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