Another way to look at this strategy is to think of it as a covered call scenario substituting the long call in place of the stock and then selling the higher strike call against the long position. With the right to buy the stock at 80 and assuming the obligation to sell the stock at 90, it produces a maximum value of 10 for the spread. While the long call position in the first scenario gives you unlimited upside potential, the inherent risk in the position in relation to your stock forecast is excessive. When you sold the 90 strike call, you assumed the obligation of delivering the stock at 90, effectively capping your upside potential. Even though you enter a spread order to be enacted simultaneously, the buy and sell option orders are still considered two separate transactions.
Vertical spreads require two commissions to open the portion and two commissions to close it.
Depending on your investment, you can possibly devour your profits with the amount of commissions that you pay. These examples do not take tax consequences into consideration. Summary When volatility is high and the time premiums seem too rich to give you a realistic chance at succeeding, vertical spreads can use that volatility to your advantage. Vertical call spreads put the ball in your court.