---
description: "A bullish capital-gain strategy (long combo hedged by a long OTM put) buying an OTM put at K1, selling an ATM put at K2, and buying an OTM call at K3, ideally structured at zero cost."
tags: [options, speculation, bullish, seagull]
---

# Bullish Long Seagull Spread

**Section**: 2.57 | **Asset Class**: Options | **Type**: Speculation

## Overview
The bullish long seagull spread is a long combo (long risk reversal) hedged against the stock price falling by buying an OTM put option. It amounts to a long position in an OTM put at K1, a short position in an ATM put at K2, and a long position in an OTM call at K3 (K1 < K2 < K3). Ideally, the trade is structured to have zero cost. The trader's outlook is bullish. This is a capital gain strategy.

## Construction
- Buy 1 OTM put option at strike K1 (lowest)
- Sell 1 ATM put option at strike K2 (middle)
- Buy 1 OTM call option at strike K3 (highest, K3 > K2 > K1)
- All same expiry; ideally zero net premium (H = 0)

Net debit or credit H

## Payoff Profile
f_T = (K1 - S_T)+ - (K2 - S_T)+ + (S_T - K3)+ - H

Breakeven depends on sign of H:
- S* = K3 + H  (if H > 0)
- S* = K2 + H  (if H < 0)
- K2 <= S* <= K3  (if H = 0)

- Max profit: P_max = unlimited  (stock rises above K3; long call gains without bound)
- Max loss: L_max = K2 - K1 + H  (if stock falls below K1; bear put spread at max loss)

## Key Conditions / Signals
- Bullish outlook; expects stock to rise above K3
- Ideally zero-cost (H = 0): the short put premium finances the long call
- Long put at K1 caps the downside loss from the short put at K2

## Notes
The bullish long seagull is the mirror of the bearish short seagull spread. The long put at K1 hedges the downside risk of the short put at K2, capping maximum loss at K2 - K1 + H. The maximum profit is unlimited on the upside via the long call at K3.