When you sell a credit call spread you limit both your profit and risk to a certain amount. Selling this particular call spread will allow us to collect $1.55 per share times 100 shares per spread or $155 per option contract we trade. We also have to lay out $1000 per option spread to our broker, but this gives us a 15.50% return on investment if the stock stays below our short strike price, which in this case is 75. Our risk is to the upside so we have to keep an eye on this stock to make sure it doesn’t break out over the role-reversal resistance.
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