The breakeven of a bull call spread is calculated by adding the net debit divided by 100 to the long call strike price. To exit a bull call spread, you have to monitor the daily price movement of the underlying stock and the fluctuating options premiums. The short call is assigned and exercised by the option holder. You can also wait until expiration and sell the long call at a slight profit to offset the trade's net debit and let the short option expire worthless. The success of these strategies depends on being able to exploit an anticipated directional move in the stock.
Timing is everything.
Try monitoring option volatilities and keeping track of support and resistance levels. Remember that a breakout beyond a stock's trading range can happen in either direction at anytime. Limiting your risk is a great way to level the playing field and options are the key to managing trading risk. Example prices were accurate at time of writing and are for illustrative purposes. This story was reprinted with the permission of the Financial Sentinel.