 Welcome to the intermediate option strategies module. In this course we are going to cover the bull call spread. In course one of this module we looked at what spreads are and why we use them. Spreads define your risk and your reward very clearly if they control your cost when you're using debit spreads and they control your risk when you use credit spreads. The bull call spread is an extension of the long call or the call buyer. When we bought a long call our outlook was bullish. We had unlimited profits to the upside and limited losses to the downside. Now the only disadvantage was that your losses could accumulate if the stock goes against your expectation. So the way we can protect against this is by using risk limiting option or the cost reducing option is your short option which would be the short call. In this case we are going to use IBM as an example and I come to the option chain for IBM and we are going to look at the July series. So let's say we were in general bullish on IBM. So the one option could be you outright you buy and add the money call. We can buy this single option contract with 10 contracts and we are going to pay six dollars and 45 cents per share. So if we look at the risk profile of this this is exactly what a long call should be. We have a maximum loss of 6450 and then because we paid six dollars and 45 cents we add that to the strike price and so break even comes out to be 206 dollars and 45 cents. We have unlimited profits on the upside as long as IBM keeps going up. So what is the problem with this? The problem with this is the fact that if you're wrong in your judgment and IBM starts to go down you can see that your losses are accumulating quite a lot. So perhaps we can look at if IBM goes down by five dollars for example then we are looking at about a three thousand dollar loss. So our goal is to somehow control this and still try to capitalize on a bullish move in IBM. So to neutralize we use a spread. We want to control how much we lose in case we go wrong in our judgment. If IBM starts to go down then we are losing a lot of money and so we want to control that and that's our primary objective with trying to put a spread in.