Bear Call Spread
A credit spread that profits when the stock stays below the short call strike. You sell a lower-strike call and buy a higher-strike call for protection, collecting a net credit.
Payoff Diagram
How to Set Up This Trade
Sell a call at a lower strike price and simultaneously buy a call at a higher strike price, both with the same expiration.
Trade Setup — 2 Legs
When to Use This Strategy
You are bearish or neutral and expect the stock to stay at or below the short call strike. Works well when implied volatility is high (more premium to collect).
Tips from the Pros
- 1
This is a credit spread — you receive money upfront and profit if the stock stays down.
- 2
Choose a short strike with a delta of 0.30 or less for a higher probability of profit.
- 3
Have a plan to close or roll if the stock moves against you — don't wait for max loss.
Quick Reference
Max Profit
Limited to the net credit received.
Max Loss
Difference between strike prices minus the net credit received (per share).
Breakeven
Lower (short) strike price + net credit received.
Best IV Environment
High IV
Time Decay (Theta)
Helps (positive theta)
Risk Level
Low RiskLearn More
Our courses cover this strategy with real trade examples and live market analysis.
Browse CoursesRelated Bearish Strategies
Other strategies for a bearish market outlook.
Long Put
Buy a put option to profit from a decline in the underlying stock. This is the simplest bearish strategy with large profit potential and limited downside risk.
Bear Put Spread
A debit spread that profits from a moderate decline in the stock price. You buy a higher-strike put and sell a lower-strike put to reduce cost. Risk and reward are both capped.