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Bear Call Spread

Low cost, decent profits if the price stays at a certain level or falls

PreviousBear Put SpreadNextHigh Volatility Options

Last updated 2 years ago

The Bear Call Spread is a strategy that helps you to make a bet on a local price drop and earn profits if the price doesn’t rise.

The Bear Call Spread is an optimal strategy when the price falls or does not change much during the period of holding. The profit zone for this strategy looks like a profit zone for the Bear Put Spread. The key difference is that with the Bear Call Spread you are immediately in profits after purchasing the strategy and don’t need to wait for a price drop.

Buying one Bear Call Spread is equal to selling a ATM call and buying a OTM call with a higher strike price.

Bear Call Spread is an inversion strategy. This means that the strategy includes selling (writing) of options, so they can't be exercised before expiry.