options strategy
Bear Call Spread
A bearish credit spread that profits when the underlying stays below the short call strike.
Max profit
Net credit received
Max loss
Spread width − net credit
Breakeven(s)
Short call strike + net credit
What is a bear call spread?
A bear call spread (also called a short call spread or call credit spread) is a two-leg strategy where you sell a call at a lower strike and buy a call at a higher strike, both at the same expiry. You collect a net credit upfront.
The trade profits when the underlying closes below your short call strike at expiry, letting both calls expire worthless. Your long call defines the maximum loss.
When to use it
Use a bear call spread when you expect the underlying to stay flat or fall, but want defined risk rather than a naked short call. It's effective when implied volatility is high, increasing the credit you collect.
A common use case is selling a call spread above a resistance level, or after a recent rally where you expect the stock to stall.
Construction
1. Sell a call at the lower strike (your income leg — this is where your breakeven sits)
2. Buy a call at the higher strike, same expiry (your protection leg)
The spread width is the difference between the strikes. Wider spreads collect more credit but carry higher maximum loss.
Profit, loss, and breakeven
Max profit: the net credit received. Achieved if the stock closes at or below the short call strike at expiry.
Max loss: spread width minus the net credit. Achieved if the stock closes at or above the long call strike at expiry.
Breakeven: short call strike plus the net credit received.
Key risks
If the underlying rallies strongly through the short call strike, the spread moves against you. Loss is capped but can be a multiple of the credit collected.
Time decay works in your favour — as seller of the net spread, theta helps your position as expiry approaches, all else equal.
Watch for sudden IV expansions (e.g. an unexpected earnings preannouncement) which can inflate the value of the spread before expiry.
Model it yourself
Open the Vega Lab dashboard, enter a ticker, and load a live option chain to build a bear call spread with real strikes and premiums. The payoff chart and heatmap update in real time as you adjust each leg.
Open dashboard →