What is the shape of a bull spread with calls?

A bull spread with calls is characterized by a specific configuration that results in a straight line when graphed against the price of the underlying asset. This spread involves buying call options at a lower strike price and selling the same number of call options at a higher strike price.

The nature of this strategy is to profit from a moderate increase in the asset price. When plotted, the curve begins at a specific break-even point and moves upwards as the price of the underlying asset increases, reflecting the limited gain potential from the spread. The linearity is due to the fixed premiums and strike prices involved, and it continues to increase until reaching the higher strike price where the profit caps out.

Therefore, the straight line visually represents the consistent and predictable return profile of this strategy within the defined price range. In contrast, the other options do not accurately describe the nature of a bull spread, which is defined and constrained by the options involved.