http://www.theoptionsguide.com/bull-spre...
If you calculate the PUTN Factor for each stock, and it exceeds the sum of the most recent quarter's growth plus 24-day average PE, go long....otherwise go short...
Hi how's it going. I get that a call spread is buying an in the money call, while shorting an out of the money call. I'm just trying to understand the money movements and how it's profitable, rather than just memorizing the mechanics of it. A short call leaves you with a credit, and if the stock goes too far up you can lose money. However, the long call would cancel this loss out. Where is the money being made? Wouldn't the short call and long call cancel each other out? I know I'm missing something - this is all new terminology to me. Any help would be great, Thanks.
