Seagull Spread

Description

A strategy consisting of a bull spread and a short put (or vice versa).

Trading Logic

Reduces cost using short options while limiting risk.

Practical Example

Stock at $100. Buy $100C, sell $110C, sell $90P.

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P/L Curve

Chart Description
  • X-Axis: Stock price at expiration
  • Y-Axis: Expected P/L ($)
  • Green area: Profit; Red area: Loss