Option Basics

Spreads $($Collars$)-2$ or more options of the same type

Bull Spread with calls

Buy a call at $x_1$

Sell a call at $x_2$

NOTE: $x_2>x_1$

Long call $S_T>x_2{x}_1$

$S_T>x_2$

Short $call{S}_T$

$x_1$

$S_T>x_2$

Short call