In the context of options, how does the cost of a Bull Call Spread compare to purchasing a call option outright?

The cost of a Bull Call Spread is indeed cheaper than purchasing a call option outright, which is why the answer is correct. A Bull Call Spread involves buying a call option at a lower strike price while simultaneously selling another call option at a higher strike price. By selling the higher strike call option, the premium received offsets part of the premium paid for the lower strike call option. This results in a lower net cost compared to simply buying a single call option.

This strategy also allows investors to limit their risk and generate a profit within a defined range of prices. In contrast, purchasing a call option outright entails paying the full premium without the offset from selling another option, making it more expensive. The Bull Call Spread is particularly advantageous for traders who are moderately bullish on an underlying asset and wish to limit their upfront investment while still having potential for profit.