Option spreads (bull call spread, iron condor)

A vertical spread uses two options of the same type and expiry but different strikes. In a bull call spread, a trader buys a call at a lower strike and sells one at a higher strike: the sold call reduces the cost, and the maximum gain is the gap between strikes minus the net premium. A bear put spread mirrors this for a falling market.

More complex structures stack spreads. An iron condor sells an out-of-the-money put spread and an out-of-the-money call spread at once, earning premium if price stays inside a range. Crypto options traders use spreads to express a view with a defined budget, and block trades of large call spreads on bitcoin are often reported as signals of where funds expect prices to go.

Spreads limit both risk and reward, so a huge rally beyond the upper strike earns no more than a modest one. Each leg pays its own bid-ask spread and fees, which adds up in less liquid strikes, and the trader must make sure the platform margins the combined position rather than each leg separately.