I’m hoping that someone could help a bit with a basic options question.
As the price of calls with low exercise prices is more expensive than ones with high exercise prices… and puts with high strikes are more expensive than low strike puts…
For, say bull call spreads, there is an intial cost (as long call with low X and short call with high X). From what I understand, this is done when you expect an increase in prices, but the sale of a short call with a high X willl cheapen just going long the low X call. So, for bull put spreads, there is an intial inflow, and you benefit from upside. So, why would you do a bull call over a bull spread when it has an intial cost and both have the same expectations (of the prices going up)?
I guess the same applies to bear calls and spreads… there is an inflow with bear calls and and an outflow intially with bear put spreads.