Choose between a Bull Call Spread and a Bull Put Spread?

Question

I am looking into trading options with an eye towards something that I would eventually do as a business. For the purposes of this question, let's assume I am working with a modest portfolio, like $25k

If I find a stock that I think is going to go up, I know enough to realize that I need a Bull spread. However, I don't know what you need to factor in to decide whether you want a Bull Call Spread or a Bull Put Spread. On paper, both will make you money when a stock goes up, right? So what's the proper approach to evaluating between the two?

Answer 1

Put and call spreads with the same strikes and expiration are synthetically equivalent. They will have approximately the same risk and reward. See the Synthetic Triangle if you want to understand why this is so. Two considerations:

If the B/A spreads on one vertical are smaller than the other then the potential profit might be a bit better.

Of greater significance is that if you timing is correct and the underlying rises enough so that you achieve maximum profit, the put spread will expire and you will have no closing costs (assignment, exercise, B/A slippage, and commissions if you're still paying them).