Strategy reference
Bear Call Spread
A bear call spread is a two-leg bearish position with capped gain and capped loss. You collect a credit up front; you keep it if the stock stays below the lower strike.
Structure
Sell one call at a lower strike and buy one call at a higher strike, both expiring on the same date. The lower-strike call pays you more than the higher-strike call costs, so you collect money up front (a net credit).
Payoff at expiration
At expiration, your maximum gain equals the credit you collected — you keep it if the stock finishes at or below the lower strike. Your maximum loss equals the gap between the two strikes minus your credit, which happens if the stock finishes at or above the higher strike. You break even when the stock finishes at the lower strike plus your credit.
- Stock price
- $100
- Sell
- 1 × $100 call @ $3.50
- Buy
- 1 × $105 call @ $1.50
- Net credit
- $2.00
- Max gain
- $2.00 at S ≤ $100
- Max loss
- $3.00 at S ≥ $105
- Breakeven
- $102.00
Frequently asked questions
What is a bear call spread?
A bear call spread is a two-leg bearish credit position: sell a call at a lower strike and buy a call at a higher strike, both with the same expiration. You collect a credit and keep it if the stock stays below the lower strike.
What is the maximum profit on a bear call spread?
The maximum profit is the net credit collected. You keep it at any expiration price at or below the lower strike.
What is the maximum loss on a bear call spread?
The maximum loss equals the width between strikes minus the credit collected. It occurs at any expiration price at or above the higher strike.
This page is an educational reference, not investment advice. Numbers in the worked example are approximations for illustration only — real option prices depend on volatility, interest rates, dividends, and time to expiration. See the full disclaimer for details.