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

# Bullish Short Seagull Spread

**Section**: 2.54 | **Asset Class**: Options | **Type**: Speculation

## Overview
The bullish short seagull spread is a bull call spread financed with a sale of an OTM put option. It amounts to a short position in an OTM put at K1, a long position in an ATM call at K2, and a short 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
- Sell 1 OTM put option at strike K1 (lowest)
- Buy 1 ATM call option at strike K2 (middle)
- Sell 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)+ + (S_T - K2)+ - (S_T - K3)+ - H

Breakeven depends on sign of H:
- S* = K2 + H  (if H > 0)
- S* = K1 + H  (if H < 0)
- K1 <= S* <= K2  (if H = 0)

- Max profit: P_max = K3 - K2 - H  (if S_T >= K3; bull call spread at max)
- Max loss: L_max = K1 + H  (if stock goes to zero; full loss on short put)

## Key Conditions / Signals
- Bullish outlook; expects stock to rise above K2 toward K3
- Ideally zero-cost (H = 0): the short put premium finances the bull call spread
- Short put at K1 creates downside exposure below K1

## Notes
The seagull spread's name comes from its payoff diagram shape. The upside is capped at K3 - K2 - H. The short put at K1 adds risk if the stock falls sharply, but at zero cost it provides a funded bullish position. Unlike the long combo, there is a defined maximum profit.