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Bull spreads are extremely risky, since an investor will make money if the stock only rises over its breakeven point. Some of its benefits are capped risk and a lower breakeven point than simply buying a call, but a major disadvantage that the strategy has is a capped reward. A typical bull spread also has its options expire on the same month.

If the tax loss rally turns into a bullish accumulation wave from hedge funds building new positions, then one of the best ways to snap up index funds or equities with using as much leverage as possible, is to create a deep ITM bull spread. Following is a mix of securities that I have on my watchlist: Research In Motion, SPDR S&P 500 ETF, Yahoo, Bank of America, Energy SPDR ETF, Apple, and Las Vegas Sands.

Please note that the chart below is for illustrative purposes only and are not buy/sell recommendations.

Click to enlarge:

7 ITM Bull Spreads

Research In Motion (RIMM) closed Friday at $15.34. Its bull spread from the above chart has a maximum risk of $1.87 a share, a maximum reward of $3.13, and a breakeven point of $15.87.

The SPDR S&P 500 ETF (NYSEARCA:SPY) bull spread has a maximum risk of $4.63 a share, a maximum reward of $3.37, and a breakeven point of $128.63.

The Yahoo (NASDAQ:YHOO) bull spread has a maximum risk of $1.50 a share, a maximum reward of $1.50, and a breakeven point of $15.50.

The Bank of America (NYSE:BAC) bull spread has a maximum risk of $0.68 a share, a maximum reward of $0.82, and a breakeven point of $6.18.

The Energy SPDR ETF (NYSEARCA:XLE) bull spread has a maximum risk of $6.88 a share, a maximum reward of $3.12, and a breakeven point of $71.88.

The Apple (NASDAQ:AAPL) bull spread has a maximum risk of $25.05 a share, a maximum reward of $24.95, and a breakeven point of $425.05.

The Las Vegas Sands (NYSE:LVS) bull spread has a maximum risk of $2.77 a share, a maximum reward of $3.23, and a breakeven point of $42.77

Please note that the maximum risk, reward and breakeven calculations are on per share basis, not per option contract, for the sake of simplicity.

Source: 7 In-The-Money Bull Spreads For 2012

Additional disclosure: I own RIMM through call options.