SPX was trading at 2068.76 on July 6th. There were 47 days until the August 21st expiration. You believe that there will be a 3% upward move in the S&P between now and then. That would mean a move up to 2130. There are a number of different bullish strategies that would benefit from a bullish move.

One trade could be the purchase of 10 SPX August 2100 calls at 23.20. The upside breakeven point is 2123.20. The maximum possible profit is unlimited. The maximum possible loss is $23,200 at 2100 or lower.1


The next move would reduce your maximum possible loss on the call purchase while at the same time limiting your maximum possible profit. This would involve the sale of 10 SPX August 2130 calls at 12.20. That means that you accrue an 11.00 debit for the SPX August 2100-2130, bull call spread. The new upside breakeven point has been lowered to 2111.00 from 2123.20. In exchange for the lower breakeven point the maximum profit is now defined. The maximum value of 30.00 of the 2100-2130 spread occurs at 2130 or higher. As soon as the SPX begins trading above 2130 the losses in the short 2130 calls negate in any gains in the long 2100 calls. The maximum possible profit is 19.00 ($19,000) at 2130 or higher, while the maximum possible loss is 11.00 ($11,000) at 2100 or lower, where the minimum value occurs. 2

You can take things one step further by shorting an additional 10 SPX August 2130 calls at 12.20 while getting long 10 SPX August 2160 calls at 5.00. You have accrued a 7.20 credit for the SPX 2160-2130 bear call spread. The maximum value for the bear spread is 30.00 at 2160 or higher. The minimum value for this spread is zero at 2130 or lower. The maximum profit of 7.20 ($7,200 occurs at 2130 or lower. The maximum loss of 22.80 ($22,800) occurs at 2160 or higher.  You have now created the long call 2100-2130-2160 butterfly spread. The SPX 2100-2130 bull call spread has been partnered up ten times with the 2160-2130 bear call spread. The sweet spot for this trade occurs at 2130 where the bull call spread is at its maximum value while the bear call spread is still at its minimum value. The 3.80 debit for this spread is the most that can be lost ($3,800).  The two breakeven points are at 2103.80 and 2157.20. 3

At expiration if SPX settles at 2130 then you would have a profit of 26.20 ($26,200).  If it moved there prior to expiration you could probably net over $5,000. AS it starts to surpass 2130 it becomes less of a bullish and adjustment will have to be made.