DATE: June 23, 2014 QUESTION:Can you explain how a Bull Credit Spread strategy works? ANSWER:A Bull Credit Spread strategy is created by selling a put with a higher strike price and buying a put with a lower strike price. These puts would have the same underlying stock and the same expiration date. A Bull Credit Spread is established for a net credit and has both limited profit potential and limited risk. This strategy is considered neutral to bullish, so a trader should make sure their market forecast is consistent with how a Bull Credit Spread strategy makes money before placing the trade. To learn more about the Bull Credit Spread strategy, view this segment of "Ask the Institute."
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