bearishCollects credit

Bear Call Spread

A bear call spread sells a call and buys a cheaper, higher-strike call as protection. You collect a net credit that you keep if the stock stays below the short strike — a defined-risk way to bet a stock won't rally.

When it makes sense

You're neutral-to-bearish, or think a rally is exhausted
IV rank is high, so the spread pays a meaningful credit
You want to short strength without unlimited risk

How it works

Sell a call (usually out of the money), buy a further-OTM call in the same expiration. Max profit is the net credit, earned if the stock closes below the short strike. Max loss is the strike width minus the credit.

Risk & reward

Defined on both sides, typically risking a few dollars per dollar of credit with a high win rate. Breakeven is the short strike plus the credit. Rallies through the short strike escalate losses quickly toward the max.

Worked example

Stock at $95. Sell the 30-day $105 call, buy the $110 call, for a $0.95 credit ($95). Stock below $105 at expiration: keep $95. Stock above $110: lose $405. Breakeven: $105.95.

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