I dont seem to understand the logic behind the bull spread strategy. What is the use of shorting a call option with a higher exercise price? When i’m long a call option and the stock price goes below the exercise price, the option expires out the money and i will not lose anything except the premium paid to buy the call. what is the need for me to short a call?
The only advantage i see is that the premium paid to buy a call is reduced by the premium i receive for shorting a call. is this the only use of bull spread strategy??