What are Bull Spreads

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What are Bull Spreads?


A Bull Spread is a simple derivative with built-in floor and ceiling levels that define the lowest and highest points at which it can settle.

This means you’ll always know your maximum potential loss and profit from the outset.

Bull Spreads are short-term contracts, settled based on an underlying market, making them suitable for hedging against movements in that market. Nadex offers Bull Spreads on the following:

  • Stock indices
  • Forex
  • Commodities

Range of Markets

How do Bull Spreads work?

How do Bull Spreads work?

A typical Bull Spread might have a title like this: EUR/USD 1.3000-1.3250 (3PM). The figures represent the floor and ceiling levels for the contract.

In this example, your trade will settle based on the underlying EUR/USD spot rate, but because of the contract’s floor and ceiling, that can be no lower than 1.3000 and no higher than 1.3250, at 3pm.

To open a position, you buy or sell at Nadex’s prevailing bid or offer price. This is based on the spot EUR/USD rate, and will be somewhere inside the floor/ceiling range. You buy if you think the price will rise, sell if you think the price will fall.

During the life of the contract, the underlying market can move for or against you, but the floor and ceiling levels shield you from movements beyond these predetermined limits.

This Bull Spread example will settle at:

  • The spot rate if it is between 1.3000 and 1.3250 at expiration
  • 1.3000 if the spot EUR/USD rate is lower than 1.3000
  • 1.3250 if the spot EUR/USD rate is higher than 1.3250

Nadex offers a range of contracts for each market, giving you the flexibility to choose your appropriate risk-to-reward ratio.

View an example of a Bull Spread trade

Benefits of Bull Spreads Trading

Benefits of trading Bull Spreads

Bull Spreads are suitable for the retail trader looking for high leverage and hedging opportunities.

  • Trade with strictly limited risk
  • Low collateral required to trade
  • Take highly leveraged positions
  • Multiple daily trading opportunities

You can open an account in five minutes and start trading Bull Spreads on our online platform. Or open a Demo account and use $25,000 in practice funds to test drive the Nadex trading experience.

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Bull Spread Contracts

Expiration Value

When a contract expires, we obtain an expiration value based on the specified underlying market, using the following process:

  1. Take the last 25 trade or midpoint* prices in the underlying market 
  2. Remove the highest five prices and the lowest five prices 
  3. Take the arithmetic average of the remaining 15 prices and round to one decimal point past the point of precision of the underlying market (with the exception of Wall Street 30, which is rounded to the same point as the underlying market)

The market prices we use to calculate the expiration values are obtained through a data feed from Reuters. If Reuters is unavailable, we may obtain market pricing data through Bloomberg or another data provider that we deem appropriate under the circumstances. 

For contracts on Events, the expiration value is the figure released by the designated reporting body.

*Midpoints apply to Forex contracts; for more specific details reference the individual contract in the Nadex Rules.


Bull Spreads are cash-settled contracts with a variable, linear payout that allow trading on the expected direction of the underlying market. 

The settlement value is obtained based on the expiration value and the floor/ceiling levels of the individual contract.

  • If the expiration value is at or below the floor level, the settlement value will be the floor level
  • If the floor level < the expiration value < the ceiling level, the settlement value = the expiration value 
  • If the expiration value is at or above the ceiling level, the settlement value will be the ceiling level

Floor/Ceiling Range

We list a wide range of Bull Spread contracts, with timescales ranging from one day to as little as two hours. As a general rule, the difference between the floor and ceiling level (the range) is smaller for contracts with a shorter duration.

As an example, the Bull Spread contracts based on EUR/USD might have the following specifications:

  • Daily (one expiration per day, floor/ceiling range = 600 pips)
    - Floor: 1.3300, Ceiling: 1.3900

  • 5 or 8 hour (three expirations per day, floor/ceiling range = 250 pips) 
    - Floor: 1.3600, Ceiling: 1.3850 
    - Floor: 1.3475, Ceiling: 1.3725 
    - Floor: 1.3350, Ceiling: 1.3600

  • 2 hour (20 expirations per day, floor/ceiling range = 100 pips)
    - Floor: 1.3550, Ceiling: 1.3650 
    - Floor: 1.3500, Ceiling: 1.3600 
    - Floor: 1.3450, Ceiling: 1.3550 

This is just an example – the actual Bull Spread contracts for EUR/USD on Nadex may be substantially different from those above.

Relation to Underlying

For Bull Spreads with a wide Floor/Ceiling range, the underlying market will generally be trading within that range. In this scenario, the price of the Bull Spread is likely to be very close, or even identical, to the price of the underlying market.

In the case of Bull Spreads with a narrow floor/ceiling range, the underlying market might be trading near (or even outside) these levels. This results in contract prices that could differ significantly from the price of the underlying market.

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Trading Examples

Step-by-step guide

An in-depth guide to placing your first Bull Spread trade, from the first step to the last.

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