Bull Spread

An option strategy in which maximum profit is attained if the underlying security rises in price. Either calls or puts can be used. The lower strike price is purchased and the higher strike price is sold. The options have the same expiration date.

Investopedia Says:
You make a lot of money if the stock rises. You lose it all if it doesn't. It's one of those higher risk maneuvers that can cause a lot of anxiety.

Related Links:
An introduction to the world of options, covering everything from primary concepts to how options work and why you might use them. Options Basics Tutorial
Learn a technique to halt losses when the market moves quickly in an unfavorable direction. Managing Bull Put Spreads With A Simple Adjustment Plan
Even beginners may use this strategy to trade a bullish outlook. Trading The QQQQ With In-The-Money Put Spreads

Option strategy, executed with puts or calls, that will be profitable if the underlying stock rises in value. The following are three varieties of bull spread:

Vertical spread: simultaneous purchase and sale of options of the same class at different strike prices, but with the same expiration date.

Calendar spread: simultaneous purchase and sale of options of the same class and the same price but at different expiration dates.

Diagonal spread: combination of vertical and calendar spreads wherein the investor buys and sells options of the same class at different strike prices and different expiration dates.

An investor who believes, for example, that XYZ stock will rise, perhaps only moderately, buys an XYZ 30 call for 11⁄2 and sells an XYZ 35 call for 1⁄2; both options are Out of the Money. The 30 and 35 are strike prices and the 11⁄2 and 1⁄2 are premiums. The net cost of this spread, or the difference between the premiums, is $1. If the stock rises to 35 just prior to expiration, the 35 call becomes worthless and the 30 call is worth $5. Thus the spread provides a profit of $4 on an investment of $1. If on the other hand the price of the stock goes down, both options expire worthless and the investor loses the entire premium.