Back Spreads For Profit
This is technically described as “selling a call (or calls) at a lower strike and buying a greater number of calls at a higher strike price”. Ideally, this trade is initiated for a minimal debit or possibly a small credit. This way, if the stock heads south, you won’t lose much.
So basically, you buy more options relative to the number of sold options. This strategy typically is placed in the expectation of a dramatic move. It is an unlimited profit, limited risk options trading strategy that is taken when the options trader thinks that the underlying stock will experience significant upside movement in the near term.
This shows the profit expectation as the price of a stock moves upward and away from the strick price. This payoff diagram is a general representation of your expected results.
