Bull call spread profit calculation

Algos, strategies, code
1

today i execute a bull call spread i buy coal India call 370 for 6.80 single contract and sold coal India 380 call for 4.10 when CMP was 370 almost at 1 pm i square off the spread and i have profit of 1650 rupees that time.at that time 370 call was at 10.60 and 380 was at 6.25

according to call bull spread maximum reward should be = diff.in strikes - net debit

so 10 - (6.80-4.10)=7.3

i square off the spread almost at 379 approximate so why the profit is so less where i am wrong in calculations…plzz help

2

Himz,

Yes your calculation of maximum reward is correct. But this maximum reward is only when you hold this strategy till expiry.

So if yesterday was the expiry day and if COAL expired at 379, you would have made 6.3 as profit.

The short calls value if you held till expiry would be 0, whereas since your trade was much before expiry, the short calls would have gained in value and hence giving you lesser profits.

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